No matter your industry or how small your operation, it’s vitally important to take the proper steps to protect your business from litigation.
Why You Need Protection
What most people don’t fully understand is that owning any type of business can significantly increase their risk for being sued. In the event of a suit, your business and personal assets could be subject to seizure to pay off creditors—and that means you could lose everything. There are many circumstances that could lead to a lawsuit—too many to list here. However, any of the following or more could be cause for a legal battle:
- Customer accidents
- Employee contract disputes
- Loan or lease defaults
- Intellectual property issues
- Tax trouble
- Personal liabilities of many kinds
No matter the reasons for the suit, your business and its assets, along with your personal home, savings, retirement, and more could be at risk. While insurance and business structuring are helpful (actually essential) tools, they simply don’t go far enough to ensure your assets are secure.
What You Should Do Now
The old adage that “an ounce of prevention is worth a pound of cure” is absolutely right when it comes to asset protection. Once a lawsuit is filed, it’s too late to cover your assets. Above all, take action today. Here are a few steps you can take right now:
- Business structuring – This is especially important if you operate as a sole proprietorship or DBA. Consult an asset protection specialist to determine how your business should be set up (LLC, limited partnership, S-corp, etc.). This is important, but it’s far from a complete solution.
- Get insured – This should be a no-brainer, but many business owners actually don’t have adequate insurance. Then, once your coverage is adequate, get more. Adding an umbrella policy can be particularly useful.
- Know your contracts – When you’ve signed a contract, your business structure probably won’t help you in a dispute. Always consult your attorney before signing, and sign only limited contracts that prevent or cap certain damages.
- Don’t make promises – Pledging personal responsibility for business debts can come back to bite you. Avoid loans that require this. If you can’t avoid them, at least consult an attorney who can place limits on that provision. Steer clear of deals with other businesses or vendors that require personal liability for debts.
- Know the law – Different locations can have vastly different laws when it comes to asset protection. There may be some laws that work in your favor, and be others that work against you. Your asset protection attorney can help you decipher local laws.
- Don’t go it alone – An asset protection “kit” is a DIY approach to asset protection. Unfortunately, many kits offer little or no real-world protection. Kits can be a step in the right direction if you consult a third-party attorney along the way. However, never trust a kit to do what a real-live asset protection specialist can.
- Diversify – There are a host of different types of lawsuits, each one presenting a unique challenge. Always diversify your approach to asset protection to ensure a high level of security.
There is no dispute over whether or not you need asset protection. You do. The only question is how to go about it. When considering how to protect your business and personal assets from litigation, a qualified asset protection attorney should be your first and only option. When troubles arise, knowing you’re protected will bring unparalleled peace of mind.
Author: Jackson Cooper is an investment & finance enthusiast, involved with the experts at American Society For Asset Protection. Look to American Society For Asset Protection, true leaders in the professional Asset Protection industry, to properly guard your assets from lawsuit & litigation. Connect with them on LinkedIn, Facebook. Learn More On YouTube