Running a business involves employing the right asset protection strategies. No matter the kind of business you run, being your own boss is quite rewarding. However, it comes with some risks. After realizing your entrepreneurship dreams, what happens next? How can you protect your assets?
Phoenix asset protection can be essential if you own a small business and work for yourself. Below are some tips to minimize your liability and ensure you are protected when your business faces a claim or lawsuit:
Pick the Most Suitable Business Structure
You probably launched your business as a sole proprietorship first without a formal legal structure. However, when you face a lawsuit, this lack of legal structure can be costly. You can protect your assets by formalizing the business and incorporating it. Your options include having a limited liability corporation (LLC), C-corporation, S-corporation, general partnership, trusts, family limited partnerships, or limited partnerships.
Use Separate Business and Personal Accounts
Do not withdraw money from business accounts for paying for personal items or charge personal items on business credit cards. It’s best to deposit your company revenue into the business bank account and pay yourself a salary. This decreases liability and makes it easier for you to manage the finances of your business.
Protect Your Intellectual Property (IP)
Intellectual property includes any inventions, symbols, artistic or literary projects, names, and whatever products your business has made. You must protect your IP, so it won’t be stolen. You can protect it through patents, copyrights, and trademarks. It is a good idea to work with a consultant firm that can manage your IP.
Use Contracts and Follow Procedures
As a business owner, you want your procedures to be free of loopholes or fraud. Proper leasing agreements and official project contracts can protect your business. It’s also important to keep everything above board as well as work with licensed, insured, and bonded experts. Also, hire asset protection experts, legal professionals, and tax advisors to help you.
Any discrepancy in your business history can cause you to face legal liability in the future. So, ensure all proper procedures are followed, no matter how long it takes.
Buy Business Insurance
Incorporation offers liability protection; however, it does not cover everything. By investing in liability insurance, you can protect your business and personal assets when you lose a lawsuit and should pay a big claim. The kind of insurance you must have depends on your industry.