What is asset protection and why is it so important?
As a business owner, it’s not always easy to separate your business activities from your personal life. However, it is important to protect your personal wealth and your family home from the many risks you face in running a business. This safeguarding of your personal assets is the goal of an asset protection strategy and it may be one of the most important strategies you implement, as a business owner.
Hope for the best, plan for the worst
We all know someone who allowed a business failure to ruin their personal finances. With a correctly implemented asset protection plan, you can significantly reduce the impact of a business failure on your personal finances and long term financial success.
Why are businesses high risk?
Running a small business can be highly rewarding, but the rewards frequently come with exposure to risks, such as
- Activities associated with being an employer
- Bad debts causing business failure
- Taking a Commercial lease
- Product claims and professional liabilities
- Inability to fulfil contractual obligations
- Trade creditors and other obligations to third parties
Knowing how to minimise these risks gives you the best chance of running a successful business, whilst protecting your assets.
What can you do to protect your assets?
Bizally can help you review your current risk exposure and work with you to put an asset protection plan in place. Even if you have been in business for a long time, it’s never too late to start implementing an asset protection strategy.
A smart asset protection strategy involves preparing for potential challenges. Your plan should include:
- Strategic ownership of assets
- Selecting the most appropriate insurance policies for you and your business
- Understanding of your contract liabilities
- Establishing the most appropriate business structure
- Lodging and paying all tax/BAS obligations on time
Which business structure provides the maximum protection of your assets?
When it comes to choosing which business structure is right for you, you must consider tax minimisation, asset protection, cost and your personal circumstances.
You may choose to run your business as a sole trader or partnership because of the simplicity of these structures; however, these structures provide little in the way of asset protection.
Setting up a trust or company is likely to offer the most effective asset protection to you. Bizally can help you understand the pros and cons of different business structures, ensuring you have the right fit and the right protection.
The first step in protecting your personal and family assets from business risks are to contact Bizally today and set up a discussion. We’ll review your status and come up with a plan and a timeline that works best for you. Remember, knowledge is power.