As an entrepreneur and a business leader, you have a lot of things to think about. As if running a company and keeping the proverbial ship afloat wasn’t hard work enough, you also need to think of asset protection and what the best ways to protect your personal and business assets are, against every liability. Without adequate protection in terms of legal, insurance, and security, your business, as well as personal assets, could be in jeopardy. Should your company get mixed up in a lawsuit or if the creditors find any suspicious transaction activity in your records, you stand to lose not only your professional but personal assets as well. Here to help you prevent these scenarios are the most effective asset protection strategies you need to implement today.
Incorporate or form a Limited Liability Company
No matter if it’s just you or a whole team of professionals, you can and should consider opening an LLC business entity, or a corporation, in order to minimize the risk of losing your personal assets in the case of a legal dispute or bankruptcy. The reason behind choosing a Limited Liability Company structure or an S corporation is that personal assets of sole proprietors do not enjoy the level of immunity required to protect personal assets. In fact, if you choose sole proprietorship, you will leave your personal assets completely vulnerable. When you do incorporate or set up an LLC entity, make sure to keep your business books and transactions separate from your personal finances. Set up a separate bank account for your company along with a company checkbook in order to maintain clear records throughout the year.
Insure business transactions with contracts and agreements
Your corporation acts as a veil that shields and protects your personal assets from outside attacks that might come from lawsuits or creditors digging around for suspicious activity. You need to maintain the integrity of that veil at all times by conducting fair and transparent business, but also using proper agreements and contracts to legalize and justify every transaction between you and your partners and clients. If you want to mitigate risk on all fronts, you will craft agreements and contracts on a project basis no matter how small the project may be. You will also keep a clean and clear payroll book, never hiring people “under the radar” or working with service and product providers who are not adequately insured. Lastly, don’t rely on simple email communication no matter how much the second party might insist on it.
Invest in business insurance for all assets
In the modern corporate world, obtaining comprehensive business insurance is a must, and it should be a part of your annual budget. When your company’s assets such as offices, vehicles, employees, and equipment are adequately covered against incidents and damages, you can avoid costly lawsuits, medical expenses, and prolonged legal disputes that might put your brand’s reputation in jeopardy. This is particularly vital in bustling business hubs the likes of Sydney, Australia. You`ll have to obtain the right insurance policy for your needs, making sure that it’s tailored to the type of assets you have in that specific location. This means that if you want to insure your vehicles, you will need New South Wales insurance from a company experienced in that location, instead of getting a cookie-cutter policy that might leave your assets exposed. Use this mindset to tailor every policy just right and protect your brand as well as your employees.
Protect personal assets
All of the aforementioned strategies aim to secure your personal and corporate assets over the long term, but if you want to take that extra step towards complete asset security, you will make sure to put our personal possessions in the name of your spouse. This will protect the assets from creditors in the case of a hefty lawsuit claim because they are not listed under your name. While it is a tough decision to make, it is still one of the best things you can do to protect your livelihood. Make sure you are in complete agreement with your significant other and have a postnuptial marital property agreement drawn up by your legal team in order to make the whole thing official and your assets air-tight.
Master the art of smart budget allocation
In addition to investing in various insurance policies, legal protection, and selecting the right business model, there are those seemingly minor decisions you make every day that can have an impact on your assets and resources. A great example is how you allocate your funds towards one of the most pivotal areas of your business: your office space. If you take another look at the Australian market, and other well-developed regions such as the US, you’ll notice that more small businesses and entrepreneurs use coworking spaces instead of renting an office. This is a brilliant way to preserve your funds and instead use a well-equipped, business-centric space ready for you and your team for the fraction of the price of a rented office.
Invest in digital surveillance and cybersecurity
Physical, hardware and software security measures are just as important as having proper insurance and a strong business structure. After all, how do you expect to win a lawsuit or overturn a false insurance claim if you have no evidence to back up your claims? This is why you should invest in digital surveillance and physical security, in order to protect your business assets from malicious attacks and illegal activity in general. Speaking of illegal activity, don’t forget to invest in a comprehensive cybersecurity system in order to safeguard sensitive business information such as customer data and employee information. Make sure that your firewall is up to date and up to code, and you should have no problem deterring hackers from probing your defenses.
Entrepreneurs and business leaders should focus on core brand processes that will drive the company forward as a whole, but in order to do that, they need to ensure the safety of their business and personal assets first. Implement these strategies to protect your assets and future-proof your business for years to come.