Despite the rewards, entrepreneurship comes with inherent risk. Of course, there’s the risk of failure, poor investments, or not making enough profit to live on. Those are the fears that keep most people from starting a business. But those risks aren’t the ones we’re here to discuss. Today, we’re talking about the risk of losing everything you’ve built, watching your success vanish seemingly overnight, and the importance of asset protection.
How Could This Happen To You?
You might be wondering how all your hard work could collapse. Well, unfortunately, it’s due to something many people don’t fully consider when starting a business: being sued. Yes, no matter what type of business you own or how large or small it is, you could be sued for a number of reasons. Here are a few common ones:
- Intellectual property or patent infringement
- Accidents on your property
- Wage claims
- Discrimination or harassment
- Wrongful termination
- Bad pre-employment questions
- Unfounded claims
That’s just the tip of the iceberg. Every day, frivolous (and not-so-frivolous) lawsuits are filed against businesses, and every day, the owners lose both business and personal assets in those suits. Nobody thinks it will happen to them, so many business people fail to plan for the worst – and then it happens. Their business, personal real estate, savings, retirement and more could easily go down the proverbial drain.[Tweet “Save your #assets. Here are 7 ways to save your personal assets in a #business lawsuit.”]
7 Essential Asset Protection Tips
Fortunately for you, there are many ways you can guard your assets against being seized to pay legal damages. All of them are worth a look, but the first one is the most important:
1. Don’t Wait
If you’re waiting for trouble to arise before providing your business with the protection it needs, don’t. Once a lawsuit is filed, it will be too late to put asset protection measures in place. That will only get you accused of fraud. No matter what kind of business you have, protect it today, before the unthinkable happens.
2. Keep an Eye on Your Stuff
You must keep accurate documentation of all your assets and liabilities. That means taking inventory regularly, writing things down, and including everything. Keep track of everything you own that has value, including business equipment, savings, retirement accounts, stocks, and personal property. This is also helpful in making sure you have adequate insurance.
3. Insure it All
You most likely have insurance – but it’s most likely not enough. You should have the proper business policies in place, as well as an umbrella policy to cover the holes. While insurance is an absolute must, it probably won’t be enough to cover the amount of a suit.
4. Structure it Well
When you set up your business, and as it grows, consult an attorney and/or CPA to help you structure it properly. The best business structure can offer protection not only from lawsuits but also from the IRS. You could be amazed at the savings you’ll find with a simple structure change. When it comes to lawsuits, however, your business structure cannot offer complete protection.
5. Know The Law
Asset protection options can vary widely from state to state. Some have some built-in protection for personal assets while others do not. Some property may be exempt from seizure, or you may be wide open for losing it all. In any case, the best way to know your local laws is to get an attorney to help you decipher the statutes.
6. Be Careful With Contracts
When possible, sign only limited contracts that won’t allow certain types of damages in a suit, or at least places limits on those damages. And in every case, sign those contracts as your business, never yourself.
7. Diversify Your Strategy
When it comes to asset protection, there is no one-stop solution. Speak to a trusted expert about all your options, then choose a plan of action that includes several different components. You will likely need a cocktail of methods for the best protection.
The best thing you can do for your own interests – and peace of mind – is act NOW. An unprotected business is an appealing target for lawsuit-happy people with opportunistic lawyers. Seek out a trustworthy source for asset protection, and you’ll be well protected for any battle that comes your way.
Jackson Cooper is a writer and business enthusiast, involved in real estate, finance, investing & asset protection. His free time is spent juggling freelance projects, skiing, mountain biking and fishing trips with his wife. Connect with Jackson – Twitter – LinkedIn