While no one likes to find themselves in the middle of a lawsuit it can very well happen to anyone and when owning your own business, it’s extremely important that you protect your assets. Let’s look at a few ways you can help protect your assets as a business owner.
One of the first things you will want to do is choose the right business entity for your company. Although there are several options out there, the most common ones you will see, especially in smaller businesses, are LLC or S Corporation. Most owning a business choose to go with either a limited liability company (LLC) or S corporation because those separate the owners’ assets from their companies’ assets. Having these in place will limit what can be touched in the event of a lawsuit.
Another thing you will want to do is make sure you keep business and personal matters separate. You want there to be a clear and concise trail to follow. You should obtain a separate bank account that handles the business finances. If you have a lease agreement, it should be in the businesses name. Most states have what is known as a Homestead Exemption. This law protects a certain amount of value of a person’s home so that it cannot be touched in the event a lawsuit is brought upon your business. Make sure you are always using the appropriate contracts and follow proper procedures when dealing with business transactions of any type.
It is also highly advisable to purchase an insurance plan that fits the needs of your business as well. This needs to be separate from your personal insurance coverage. You can also purchase umbrella insurance. This is an added protection that will cover what is left uncovered by your regular business insurance.
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