In an ideal world, business is business; personal is personal, and never should the twain meet.
But, for many small business owners, business is extremely personal. Your business may be your talent/passion as well as your means of supporting yourself. That mix of business and personal is a good combination, however your personal assets – such as your property, your possessions, your home and other worldly goods – these things should be kept completely separate from your business.
Forming your own business is a big, bold step that comes with its fair share of advantages and risks. Some of that risk you can project, but some you simply CANNOT foresee. Part of your job is to ensure that the risks don’t come at your own personal expense.
Are you personally liable if:
- You’re a computer technician and you wipe out a client’s entire hard drive during a repair of a program?
- You own a housecleaning business and an employee accidentally breaks a valuable antique?
- A customer requires medical attention after tripping and falling in your store?
There are other reasons that might have absolutely nothing to do with the quality of your work or the work of your employees that could put your personal assets at risk. Clients who do not pay you on time impact your ability to pay your vendors, who can, in turn, seek reimbursement for their products or services through legal action.
Of course you want to stand by your business; its success thrives on your reputation. At the same time, however, you need to protect your personal assets so that your private possessions and funds cannot be legally held accountable to satisfy any monetary judgments against your business.
Not that you plan or expect something like that to happen. You don’t consciously set out to do something in your business that will end up in a lawsuit. George Harrison didn’t consciously plagiarize one of his most famous songs, My Sweet Lord, but that didn’t stop the court from ordering him to fork over more than two million dollars in copyright infringement penalties.
Planning for the unexpected is part of what you need to do as a responsible business owner. These things happen in business, and while they aren’t pleasant, you can minimize their impact on your personal life, both mentally and financially. When you know your personal assets are safeguarded, your mind will be better able to deal with the liability issues.
One of the most important steps you can take to ensure the protection of your personal assets is the way in which you choose to structure your business. The structure you choose should depend on the type of business you own, and although sole proprietorships may work for many simple businesses with minimal exposure to the public and low risk for claims, setting up an LLC or an S-Corp will protect your personal assets just in case.
Once you’ve selected the structure that is right for your business, CorpNet.com(R) can help you to file the required documents and make your Incorporation or LLC formation official. From checking the availability of your business name to obtaining a federal tax identification number to preparing your Initial/Annual Report filing for your corporation or LLC, CorpNet.com can handle all of your business filing needs. Our reasonably priced incorporation and LLC formation packages is guaranteed to meet your expectations and your state’s requirements.
Incorporating with Corpnet is the fastest, most economical way to protect your assets. Here are a few other tips to keep in mind once your incorporation is complete:
Review any contracts, both those that you sign and those that you have your clients sign, to make sure both you and the client know what you are and are not responsible for.
Buy insurance. This may or may not be a good choice for you, depending on whether or not you have employees, your level of exposure to the public, the potential for physical injury or property damages and other factors.
If you own a second home or other property, or have saved or inherited a sizeable sum, you might also consider putting some of your personal assets under a different name. Of course, make it someone that your trust.
Speaking of trust, if you are unsure or uncomfortable with any business decisions that you have to make, you should by all means seek the legal advice and expertise of an attorney. Covering your assets will be well worth the price!