Business asset protection needs to be considered early in your business formation process. It’s never too soon to think about asset protection. Many businessmen think business asset protection planning is only needed after they are successful and have made a lot of money. It doesn’t always work that way.
Minimize Your Risk
A few years ago, many of my clients were involved in real estate investing. They didn’t want to miss out on the housing boom. So they invested quickly without giving a thought to the risk. They invested in their own names and put all of their personal assets at risk. Real estate seemed like a sure thing at the time. Others of my clients were so busy running their operations that they didn’t take time to think about business asset protection. When the bubble burst, many were in trouble. Fast changing economies demonstrate more than ever that business asset protection should not wait until you are successful or have a million dollars.
Since the downturn, many folks have come to see me. Unfortunately, many came a little late. During the boom these folks had invested or run companies in their own names. Many lost those investments and companies. This put their homes and personal assets at risk. They came asking for help. What I have to tell them isn’t always happy. Sure there are some things I can do, but it would have been better if they had started with a business asset protection plan in place.
Plan Early for Trouble
Business asset protection should be considered at the time of business formation. There are simple actions you can and should take for your business asset protection before you take any business risk. The trouble is that, like the people who came to see me already in trouble, most people do not even think about forming a business foundation, before they begin their endeavor. This puts them at personal risk from the beginning.
A Secure Business Foundation
The first step in business asset protection is to form a secure business foundation. It is best to use a legal entity in the business formation of your company. This could be a corporation, partnership or LLC. Which business form you use depends on your business. The LLC Wizard has a business decision chart to help make an informed choice. I can say that generally the LLC is the best choice. If you don’t have time to study your options, just get an LLC.
Once you have a business entity in place, you need to get a business asset protection plan in place. This should be a complete plan for protecting your assets. It is not a difficult process but really a series of simple steps that you take to protect yourself; both your business and your personal assets. It involves legal documents, insurance, and personal diligence to keep up the asset protection shield. Sure it takes some time to decide what is needed, but it is worth it.
For asset protection on the personal side, check out my book, Protecting Your Financial Future.