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As an entrepreneur or as a business person, you know how essential assets are to the success of your venture. Whether the industry you’re operating in is technology, education, health, or wellness, asset protection is vital.
It’s inevitable that when you’re operating a business, you’re naturally prone to risks. From loans, lawsuit threats, or even natural disasters, your business will never be excluded from negative eventualities no matter what strategies you employ. Having said that, it’s crucial to protect your assets using the best strategies right from day one.
How Do You Protect Your Assets?
Being able to determine how to effectively protect your assets will depend on several factors, including your industry and business model, among others.
The first step is to start thinking about asset protection before a risk occurs. Once a claim or a lawsuit has happened, it’ll be too late. So, ask yourself what risks are likely to face your business. Then, take the necessary measures to protect your assets. Also, you must regularly update your asset protection strategies whenever a major change occurs in your business or assets.
Furthermore, if there are gaps in your business history, this can make you liable, and you might lose your assets in the future. Thus, you better invest money now to protect your assets rather than losing everything in the future.
While all these are necessary for the success of your business, here are key strategies to keeping your assets protected against risks, allowing your business to move forward smoothly:
1. Set Up a Corporation or a Limited Liability Company
If you’re operating your business under the sole proprietor plans, making it a corporation or a limited liability company is a brilliant idea of reducing asset risks. A limited liability company is designed to help you avoid becoming personally liable for debts incurred by your business. In doing so, you’ll be protecting your personal assets against any threat of losing them to your business’s creditors.
2. Use Contracts and Follow the Correct Procedures
Your goal should be to avoid any fraud or loophole in your contracts and procedures to protect your business assets. Always ensure your assets are protected by official contracts and agreements, and keep everything above board. This is where working with licensed experts becomes of utmost importance as they can advise you in case complex procedures are to be followed. Some of these experts are legal tax advisors and asset protection specialists.
You may check out resources like Mile High Estate Planning to learn more about asset protection.
3. Have a Business Succession Plan in Place
Most businesses not only lose assets from lawsuits, but also lose due to a lack of a proper business succession plan. So, start thinking about what might happen to your business if something happens and you’re unable to run your business.
It would be best if you have a succession plan in place to protect your assets. No one likes to think of that day when they can no longer manage their business. However, some things are just inevitable, and an untoward incident could make you unable to show up for work. So, make sure that the people you expect to step in know the roles they’re expected to assume and are aware of the whereabouts of your assets.
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4. Store Important Information in Digital Form
One of the most effective ways of protecting your business assets is to keep accurate records. You should be able to produce these records in case of a lawsuit. To be useful, those records must be secure. Storing detailed asset information digitally will ensure you can access them whenever necessary.
5. Protect Your Intellectual Properties
While you may think that intellectual property doesn’t need protection, it’s, still, one of your business assets and, thus, should be protected.
Intellectual property refers to any symbol, name, invention, artistic project, or any other item you’ve created. Patents, trademarks, and copyrights are all examples of intellectual properties that need protection. Protecting your intellectual properties ensures that other people won’t be able to steal and use them.
6. Umbrella Insurance
Too often, most people neglect insurance. They assume that risks won’t occur. When an asset is compromised, insurance can reduce the risk of loss. You can use many insurance policies to protect your assets, but umbrella insurance outshines all of them.
Umbrella insurance is an effective way to protect your assets. It’s a cost-effective method of obtaining extra liability coverage. It keeps hold of all your assets in case your other insurance policies aren’t able to cover them. However, umbrella insurance won’t cover any loss arising from your careless, criminal, negligent, and fraudulent actions.
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7. Hire a Lawyer
Another tip that can help protect your assets is to hire a lawyer. Even before you open your business, you should have a lawyer to help you iron out legal challenges you might face in the future. Discussing with your business lawyer can help answer some questions, such as whether to set up your business as a sole proprietorship, a partnership, or a limited liability company. They’ll also help you understand the pros and cons of each classification in relation to asset protection.
For instance, most people tend to set up a sole trader business. One challenge with this type of business is that you might be vulnerable to legal lawsuits. Remember that any legal lawsuit against your business can cause you to lose your personal assets. On the other hand, a limited liability company offers protection of your personal assets should a legal lawsuit be raised against your business.
Takeaway
Operating a business isn’t easy and isn’t without risk. Remember, success isn’t always guaranteed. That’s why protecting your assets is a must as it safeguards them from creditor threats, lawsuits, natural disasters, and many other dangers.
It’s of the essence to seek professional advice on how you can best secure both your personal and business assets. With your assets protected, you can live a stress-free life, knowing that what you only need now is to focus on the growth and the expansion of your business.
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