How To Protect Your Assets In Case Your Business Goes Belly Up
Do you own a start-up or a small business? If you do, you understand how many sleepless nights and how much effort it takes to get a new company off the ground. You may get overwhelmed thinking about all the ways that your business might fail in the first couple years. What if the unthinkable happens? What if an unsatisfied client sues? What if you have a catastrophic loss of your business property? Will you be able to cover the expenses that are incurred? How can you protect your assets against a loss?
These are all crucial factors to consider while in the beginning of your business and they only grow as your business grows. The truth is, you don’t want to be left wondering what to do if a loss occurs. You can get in touch aboutinsurance for businesseswith BMC Insurance, a local insurance broker. We are willing and excited to help you decide how to make sure your business is sufficiently covered.
While we hope that a serious loss doesn’t occur to you, it is important that you have certain strategies in place when you are planning on the future of your business.
Obtain General Liability Or Professional Liability For Your Business
As a business owner, it is your job to make sure your business is covered if something happens at your place of business or you are to make a mistake that leads to financial loss for one of your clients. If you are a sole proprietor this is even more vital because if someone tries to sue you they may try to come after your personal assets. As a business owner it is important that you protect all of the company’s assets, but it is also important that you protect your personal assets in the event the business goes belly up.
Add Umbrella Insurance On Top Of Your Current Coverage
In the event that your business is liable for a loss, an umbrella offers you an extra layer of coverage in case your underlying limits are exceeded. Compared to how expensive a lawsuit could be, a few hundred dollars a year for a million dollars of liability coverage is a no brainer.
If you’re unsure whether your current policies are providing enough protection, you should contact BMC Insurance for an in-depth review on which insurances will be the right choice for you.
Protect Your Assets Through Your Business’ Entity
Business owners’ most common error is combining their personal and business assets into one large pot. The combination of these assets makes it incredibly fragile, and you could lose everything if you fall. Make sure you keep a distinct difference between your business and personal assets. One way to do this is by setting up your business as its own entity rather than it being bundled under you as a sole proprietor.
Here are some examples :
- Limited Partnerships help you restrict your exposure if your company is embroiled in a costly lawsuit or encounters another issue that necessitates expensive intervention.
- Corporations allow you to keep most of your assets, but they have limitations such as an annual fee and some business requirements, such as having a board of directors.
- We advocate for limited liability companies (LLCs) because they give you more freedom than corporations and offer the best asset protection, and they frequently come with fewer restrictions.
Create An Asset Protection Trust
Having an asset protection trust as a business owner is the best thing you can do for current and future cash flow. No one can touch your assets if you have well thought out asset protection. Not to add that any judgment or litigation that occurs will have no bearing on you. However, you should consult with your advisors and skilled financial experts to help you navigate the procedure.
Consider Getting The Homestead Exemption
The homestead exemption, also known as the homesteading rule, is legal protection offered to homeowners in the form of an exemption available in the majority of states that preserves a specific amount of home equity from the compulsory sale.
This exemption can be used in bankruptcy, allowing the debtor to keep their property (or “homestead”) while repaying their obligations.
After deciding which method will protect you and your business you can rest easy, certain that your business will be protected in the event the unexpected happens. Having the right amount of business insurance helps relieve stress and refocus your efforts on running a productive, successful, and gratifying business for years to come. Contact a reputable insurance provider right away to make sure you have the most important insurance coverages.