As a business owner, you must have realized that this field is full of risks.
It is not just a matter of gaining profit, but protecting from claims and lawsuits is equally important because these expenses can turn your profit into a big loss.
The risk factors may include debts, mortgage obligations to third parties and vendors, claims for damages caused by your employees, product liability and consumer protection issues. A successful businessman is the one who can handle all these risks and minimize them with proper estate planning.
To protect your business from asset losses, you need a foolproof plan. Unfortunately, the small businesses are more prone to these dangers as mostly they are unaware of these risks and they don’t make proper arrangements for estate planning. If you have not made it ready yet, don’t wait and get it ready. The professional attorneys behind https://www.atlantaestatelawcenter.com/ suggest doing all the estate planning in time because a strong estate protection plan is the one that exists longer. An appropriate asset protection plan makes prior arrangements and employs legal strategies before a lawsuit or claim arises.
Choosing the Right Business Entity:
One of the best business strategies is to own nothing but have control of everything. This can be done transferring all the assets to protective entities like LLCs, trusts and limited partnerships. Setting up such an entity can protect your business from multiple tax considerations. So it is better to avoid sole proprietorship and move towards the development of your assets.
Keep Business Assets and Personal Assets Separate:
There is a term used in the business field known as the corporate veil. It is a separation between personal and business assets. If you use this veil it acts as a protective shield for your personal assets in case of a lawsuit. This separation may include:
- Maintaining separate accounts and checkbooks for business
- The property should be in the name of the company not on your own
- Use your company name in all documents
- Maintain the minutes of all meetings
- Maintain your all corporate logs
Use Proper Contracts and Procedures:
If there will be any loophole or fraud in your procedures, it will be very easy for the creditors to break the corporate veil and attack your personal property. Using good leasing agreements for rentals, placing the titles in the company name, having agreements and contracts for every project, not relying just on emails and never hiring people under the table can avoid all the damages. Always prefer to hire licensed, bonded and insured professionals. It is also important to have asset protection specialists, legal and tax advisors and contractors to assist you in your business.
Obtain Umbrella Insurance:
Umbrella insurance can be of a business or personal type. This insurance acts as a roof on all the insurances you have. The annual cost of this insurance is not too much to be an extra burden. However, thinking that this insurance will cover everything is not true. Negligence, fraudulent, criminal or reckless actions are not covered by this insurance.
Hold Long-Term Assets in a Super:
If there are assets that you want to have for long, holding them in self-managed super is a good idea. They are generally protected in a lawsuit, but you cannot use them until retirement age. The assets in SMSF are protected by the government then they do not pay your age pension. So keeping the long term assets is a good way to protect you after retirement age.
Place Certain Assets in your Spouse Name:
If any person is having an occupation or lifestyle full of risks, it is wise to transfer assets in the spouse’s name. Generally, the creditors cannot claim the assets of the spouse in case of a lawsuit. The most valuable assets are held as separate property of the spouse so that it will be impossible to touch them in any situation. These include prenuptial and postnuptial marital property agreements. Using these agreements also needs to be carefully implemented because these divisions can cause serious damage in case of divorce.
Consider the Homestead Exemption:
This is one of the most powerful exemptions available for the protection of assets. According to this exemption, your personal home or residence does not come under any claim. This exemption is available in most areas that protect a certain amount of the value of a person’s home from a creditor or bankruptcy.
These recommended strategies are a tiny amount of available laws and covers to protect you from any asset loss. With a peaceful mind and secured property, you can grow your business and experiment with new ventures. You just need to understand the whole system and get professional help to save time and resources effectively.
