Business is all about risks. There are risks like theft, lawsuits, or loss by natural disasters such as fire or floods. As an entrepreneur or a business leader, the best you can do is to take some steps to protect your business assets. It is a safety net to keep your hard work from going down the drain in the event of threats. In this regard, we have compiled a quick guide on how to protect your essential business assets.
As you set up shop, you should ensure you pick the right business type. The right business structure will give your business a corporate veil and offer considerable protection from any lawsuits and losses. A sole proprietorship is not well suited in protecting you. First and foremost, in a sole proprietorship, you cannot protect your personal assets from a potential lawsuit. In this case, there is no legal difference between you and your business. Secondly, if something happens to you, your business cannot continue perpetually. The best business structure would be an LCC or a C-corporation.
It would be best to avoid fraudulent deals. For example, ensure you have good lease arrangements if you haven’t started already. Remember, some creditors might want to catch you in the wrong and attack your personal assets. You should also only hire licensed and qualified professionals to handle your business operations. Ensure you have proper contracts for each project. Examples of such professionals include maintenance specialists, accountants, financial advisors, and asset protection specialists depending on the nature of the business.
Tip: Avoid sending any important information via email without putting everything down in legally binding contracts. Also, place all your equipment and property in your company name.
Your digital assets are just as important as your physical assets, and it is your responsibility to protect them. There are many ways you can protect your digital assets, such as investing in end-to-end encryption and backing up all your important files to cloud storage. You could also hire the services of an IT managed services provider who can bridge the gap in your in-house IT department and fulfill all your cybersecurity business needs. It will help you avoid costly data breaches.
Once you have a suitable business entity, you will need to protect your business assets further. It would be wise to create a separate bank account and checkbook for your business rather than your personal bank account. Ensure you use your company name and logo on your documents and records. It would also be wise to maintain important records such as the minutes of your AGMs and ensure your books are up to date.
Tip: Hire an accountant to help maintain proper books for your business.
Tenancy by the entirety means that if one spouse gets sued, their shared property cannot be seized by the court. Even though the rest of your business assets might be at risk, at least you will have a roof over your head. Unfortunately, not every state can allow you to title your personal residence as a tenancy by the entirety. However, if the state allows it, you will find that it is statutory-based, meaning you don’t have to pay lots of money to maintain this designation.
An excellent way to protect your business assets would be to invest in insurance. A disgruntled employee or customer could decide to file a lawsuit against your business. You could also lose your valuables to natural disasters such as floods or fire. We guarantee you won’t have to shell out thousands of dollars in a court of law with insurance. There are numerous types of insurance you could incorporate for your business. For instance, premises liability insurance protects your business from a lawsuit if an employee injures themselves at work.
In addition to the business insurance you already have, it would be wise to obtain umbrella insurance to give you an extra layer of protection. However, a general rule is that umbrella insurance will not cover any fraudulent or criminal business operations. You can expect to pay around $500 a year for up to $2 million in coverage depending on the provider. This is a good deal if you know you are conducting honest business and need the extra asset protection.
It would also be strategic to place some assets in your spouse’s name. Therefore, when creditors come to attack your assets, they won’t be in a position to reach anything registered under your spouse’s name. However, if you divorce, you could lose the assets titled in their name forever since the state will not recognize your earlier agreement.
In most cases, there is no need to reinvent the wheel when it comes to protecting your business assets. Work with some proven strategies but don’t forget to evolve with the changing needs. Tech assets are also that important in your business. So, ensure you work to guard your digital assets.