asset protection small business owners

Easy Asset Protection for Small Business Owners

5 Ways for Small Business Owners to Protect Their Assets

When it comes to protecting what’s most important to you and your business, it literally pays to be proactive. Asset protection helps small business owners prevent large-scale losses—both personal and professional—in the event of a lawsuit or bankruptcy.

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Asset Protection Strategies for Small Business Owners

Not just for ultra-high-net-worth planners, the following are some highly effective asset protection methods that can safeguard you, your family, or your business.

Insurance – Invest or Take the Risk Without It?

Insurance is the first line of defense when it comes to a small business owner’s asset protection. A lawsuit can be filed against you at any time and for any reason. If your case ends up in court, then there might be more dollar signs in your future than you expected. 

What if someone is injured at your place of business? They could try to sue you professionally and personally. If you are personally sued, it could devastate your family and impact your business. You’ll need adequate insurance coverage for a variety of perils, including those that seem farfetched (like a pandemic).

When in doubt, you can always opt for umbrella coverage. In the unexpected event that your insurance policy is maxed out, an umbrella policy will help cover the unexpected expenses. We can review your current policies to help you better protect yourself. 

Seriously folks, insurance is the cheapest money you could buy. What are you waiting for?

Business Entities – Are You Sure of Your Structure?

Owning your own business is one of the best ways to generate major wealth, even though it can be a serious liability. It’s important to ensure you have the right business entity structure in place so your personal assets aren’t at risk if your company runs into trouble.

Forming entities like LLCs or corporations can protect small business owners from personal liability, not only for business debts but also for actions taken by a business partner. If a partner is sued for something unrelated to the business, or even for misconduct within it, the proper entity structure can shield the other owners’ personal assets and limit exposure. This legal separation helps ensure that one partner’s legal issues don’t jeopardize the personal or financial well-being of the others. Keep in mind that once you’ve chosen an entity structure, you’re responsible for doing the things necessary to maintain it. If you don’t, it’s possible that the entity might not protect you the way you expect.

Statutory Exemptions – Florida Creditor Protection

Another asset protection strategy available to small business owners is taking advantage of state and federal “exemptions” from creditors and judgments. The availability and amount of protection offered by these exemptions can vary by state. 

For example, Florida’s homestead exemption protects the equity you have in your home from creditors. Funds in protected retirement plans, such as 401(k)s and IRAs, may also qualify as exempt assets. These exemptions may not provide complete protection in all situations, but they can provide significant security for certain assets. 

Tax Planning – Are You Overpaying the Government?

High-quality asset protection work has three pillars: liability protection, privacy, and tax planning. You might never have to defend a lawsuit, but Uncle Sam and his deputy, the IRS, will come every year asking (to put it mildly) for their share of your hard-earned wealth. Do you want to give up more than the minimum required?

There are many promoters selling kits, seminars, and programs that claim to provide “asset protection.’ If the person talking isn’t a licensed attorney – RUN AWAY. You need someone with firm knowledge of estate and probate statutes, tax laws, and corporate structures to create a protection plan for you that is both legal and maximally beneficial.

Estate Planning – Answering the What-Ifs of the Future

The most overlooked detail in business owner asset protection is the potential for a sudden, unexpected incapacity. Strange, since your unexpected accident or illness is the biggest risk to your family’s well-being—and possibly to your business assets, too. 

You have worked long and hard to get where you are now. If you become incapacitated without a plan in place prior to your incapacity, your family and business could face potentially devastating outcomes.

If you have a plan in place, when was the last time you reviewed it? Do you still feel that the same people should receive your assets? What if laws have changed since your plan was last reviewed? 

What is one of the best ways for a business owner to protect personal assets? Start Now!

Once you are threatened with a lawsuit, it is too late to protect your assets. Similar to Estate Planning, asset protection planning is something that you need before it impacts (and probably changes) your life. It is not one-and-done, either, nor is it something you should DIY. The greatest gift you could give to your family is to plan for the future—and now is the best time to start planning. We can help protect your physical and intangible assets for years to come. Contact us at hello@yolofskylaw.com or schedule a call today to get started.