As you plan to start your new business, remember to consider an often-overlooked area: asset protection. You do not want all of your hard work to be for naught if you or an employee suffers an accident, opening yourself up to exposure that could have been prevented. The experts at the American Society of Asset Protection warn, “It is a tragedy to see people left bankrupt as a result of a lawsuit, especially when these tragedies could have been avoided if these people were structured properly.”
What Can Go Wrong
A company can be the victim of a lawsuit for any of the following reasons:
- Financial changes
- A partner leaving a business
- Personal matters
- Negligent employees
- Defaulting on loans, leases or mortgages
- Contract disputes
- Employment law arguments
- Taxation issues and more.
Even if you carefully structure your business and set up solid insurance coverage, you still need asset protection to cover unexpected events. The following tips can help you with asset protection as you start your business.
Tip 1 – Reasons for Asset Protection
In additional to liability insurance, asset protection can help you in the following ways:
- Protection against lawsuits
- Savings on taxes and
- Structure of succession plans.
Tip 2 – Protection against Unexpected Expenses
Asset protection helps reduce financial risks associated with some businesses, such as higher loan rates, higher down payments in some situation and increased compliance. A professional can help you evaluate any weaknesses and then address them accordingly.
Tip 3 – Minimizing Fraud
Protection against loss from fraud has become increasingly important to many businesses. You might need to take advantage of related services, such as authentication, crime prevention, and screening efforts.
Tip 4 – Ownership of Intellectual Property
You will also need to consider who owns your intellectual property and other creative assets. For example, if you develop a business logo and name, you will need to ensure that it’s protected. When an employee creates something for you, you will need to clarify who owns it as you will not want to have this discussion should a conflict arise down the road.
Tip 5 – Take a Complete Inventory Periodically
Depending on the type of business, you will need to take a complete inventory of debts and assets every six to twelve months.
Tip 6 – Agreements Should Be Written, not Verbal
In today’s day and age, most business agreements will be written. Do not make a verbal promise with another business. At the same time, pay attention to contracts. These should be in the business name so that you are protected personally. Any damages listed should be set at a maximum cap.
Tip 7 – Consider Your Location when Reviewing Exemptions
Certain states favor businesses over creditors and vice versa. How you set up your business will depend on where you live. For example, certain states exempt some properties from creditors. You can keep those properties in your name.
Tip 8 – Obtain Professional Help
While you probably realize that you need malpractice insurance, asset protection involves much more extensive coverage. Liability insurance may have gaps, which leave a business vulnerable. In addition, higher coverage amounts can serve as a magnet for litigators, who look for businesses with the maximum amount of coverage.
About the Author:
Jackson Cooper is an investment & finance enthusiast, involved with the experts at American Society For Asset Protection. Look to American Society For Asset Protection, true leaders in the professional Asset Protection industry, to properly guard your assets from lawsuit & litigation. Connect with them on LinkedIn, Facebook. Learn More On YouTube .