Anyone who owns their own business is aware of the inherent risks of business ownership, and no one wants those risks spilling over into their personal finances. To avoid this, business owners must take the necessary steps to protect their personal assets by ensuring that their business and personal lives remain legally separate.
To protect personal wealth from business liabilities, business owners should:
Select the correct business structure. Establishing your company as a limited liability company (LLC) or corporation will provide you with important personal liability protection than if you operate your company as a sole proprietorship.
Separate your finances. Personal and business finances must be kept completely separated, with separate bank accounts and credit cards for each. You should be careful to use the name of the business and not your own name when signing business documents such as contracts and property leases or titles.
Follow the rules. If your business does not comply with all applicable rules and regulations, you can potentially lose your personal liability protection if it can be proven that you were negligent or committed fraud.
Have the right insurance. If you own the building that houses your company, you must have separate insurance policies for the business and the property. If a lawsuit is filed against your business, having the right insurance will help protect your personal assets from any legal judgment against the business.
Consulting with an experienced business attorney on the right business structure and putting the proper processes in place to help avoid business litigation is key to protecting your personal wealth.
Johnson Legal PC founder Adrian Johnson, Esq., worked on Wall Street for many years, where he bought and sold over 100 companies. He has built his law firm with experience and technological savvy to ensure clients have 24/7 access for their business legal needs. Contact us to learn more about how a great corporate attorney can help your business thrive.