Asset protection is keeping ones belongings, properties and investments safe from being taken by people who may enter into and win a lawsuit against you. If you are in business of any kind, you are only one unhappy customer away from getting sued and you will need to take some proactive steps to ensure that you don’t lose your assets. Here are 6 important rules you should know about asset protection planning.
#1. Plan your asset protection strategy ahead of time
Once sued, it will be too late to put asset protection in place and there will be little to nothing you can do at that point in time. Tip number one is, prepare ahead of time.
#2. Personal and business assets should remain Separate
If you don’t differentiate your own personal assets from business assets, you could be heading for trouble. If you’re running a sole proprietorship in particular, you will need to keep proper records and keep your business accounts separate from your personal accounts.
#3. Being a sole proprietor could be risky
If you are the sole owner of a business and an upset customer decides to sue you, your assets can be taken away from you if the case doesn’t go in your favor. Unless you have some very good reasons for wanting run a sole proprietorship, other forms of business such as a multi-partner partnership or a limited liability company, might be a better idea.
#4. A two-man partnership is risky
This may perhaps be an even worse idea than a sole proprietorship is. This means that you are liable for any errors made by your partner, and you are also responsible for whatever assets are bought in the name of that company.
#5. Meet Yearly Requirements
After protecting your assets, it is important that you keep your company’s registration up to date, hold annual meetings and meet other requirements.
#6. Business assets should be protected
Even your own personal business should be protected from yourself, and running a limited liability company is usually the best way to do this. This will prevent you in certain instances when you might have had personal liability otherwise. For instance, if someone gets injured on your business premises, they will not be able to sue you personally.