Business and risks have always been synonymous to each other, however, we try to start the new venture, makes a strong plan to reduce the risk factors and protect your assets. Whenever you plan to start a new venture, there is always an element of unpredictability. It could result in you losing your business and all the assets attached to it, let alone the chances of it flourishing. Assets are something that you have amassed over the years, with a lot of hard work and sweat. The fear of losing everything in a flash due to an unprecedented event when trying to set up a business may discourage some from diving into unchartered territories.
However, if there were some kind of guarantee an assurance that could protect your assets from these mishaps and were not entirely on the fate of your business, maybe it will help you breathe a little easy. This is not completely impossible; in fact, adopting some simple strategies can combat the “risk factor” and protect your assets safe and sound. Therefore, if you want to start a business, the following points will be able to give you a clear insight on what you could adapt in order to not break a sweat about your valuable assets.
Know the risks associated with business
First things first, being well aware of the risks of business is of utmost importance. The biggest mistake that you can make is not testing the waters before entering it. Every kind of business has some kind of loophole that can be exploited by people. Moreover, different businesses have a different kind of risks and it doesn’t take much for disaster to hit. Only if you know all the problems that can take place in the foreseeable future, only then you can take the necessary steps and precautions. Being aware may catch you wrong-footed and you may not be able to take the correct decision at the correct time.
Make the right choice while finalizing your business entity
This is applicable when you are starting a new business venture. There are different types of entities you need to decide which is the most amiable to you. Speaking from a complete business perspective, starting a solo personal proprietorship has more risks attached to it even though the profit margins are higher. Having a Limited Liability Company (LLC) is much safer as long as the assets are concerned. Therefore, if you are still inexperienced in a particular field, this seems like the more logical choice to make.
Have a corporate veil
Just having the official papers of the acquirement of your entity in your table is not going to hold good in case someone wants to file a lawsuit. There have to be more concrete legal attachments. Make sure you have an exclusive account and associated checkbooks in the name of the business and all the agreements and lease are also transferred properly. Do not depend on emails and soft copies, have proper logs of annual and shareholder meetings. This will create a sense of transparency and credibility as well.
Appoint a lawyer for your business to protect your assets
You may feel that you have everything covered, but the people who are looking to sink their teeth in you can be more experienced in this field. It is always advisable to be covered and protected by an expert and who else is better than a corporate lawyer. However sorted out your situation might seem at the moment, always have a lawyer handy in case things go south. They will be able to help you counter the claims by your creditors efficiently. They also help in closing all loopholes while making deals and agreements and thus lessen the chance of any potential attack.
Have your business insured, especially with Umbrella Insurance
The concept of insurance is applicable to all things and your business is no exception. Whatever your budget is during the time of induction, you should keep aside a part of it for insurance. Another important type of insurance that you could get is the umbrella type. In this kind of Insurance, everything is under one head. A yearly deposition of 200 to 300 dollars amounts to millions of dollars. There are some important aspects to be kept in mind though. Insurance doesn’t cover each and everything. Plus, insurances are very sensitive, fraudulent, criminal or unrequited cases are not covered. A strict legal protocol is attached to it.
Use legal procedures and reliable contracts
The illegal way may seem easy and may save some money for you but you are bound to get caught sometime or the other. However, if you pertain to legal procedures, your business will be much more sanguine and reliable. Moreover, it will give very less opportunity for creditors to attack your assets. The role of a lawyer is instrumental here. Review all the agreements and contracts carefully and make sure that it is all within legal bounds.
Transfer some assets under your wife’s name
This is one very reliable way of cordoning off some of your assets from the path of danger. You could make your wife the main nominee for some assets, this will ensure that these assets are not touched even if things go south and all your assets are seized. One common agreement is prenuptial as well postnuptial agreement. This is especially useful when the business is very volatile.
Use homestead exemption to your advantage
Most places make the provision of including your personal residence under homestead exemption. Take advantage of this situation and include your house under this and it will stay even if your dreams don’t work out the way you want.
Make multiple segments of your business to protect your assets
Last but not least, having small segments of a business is much more beneficial than having a single large one. You can make segments to protect your assets as well, crediting each asset to a particular one. Thus, even if one doesn’t work out, there are always other prospects that could be beneficial as well as compensatory.
The main idea here is to not put any asset in any kind of danger and eliminate an unnecessary headache and tension and concentrate wholeheartedly on the business alone. Though the associated risks are like walking on thin ice, if trodden carefully, it can be managed pretty well.