When you start a business, you might begin to worry about your personal assets. What if someone sues your company? Can your home be taken? What if you have to file for bankruptcy because the economy tanks again? Will you have to become personally bankrupt as well? Fortunately, there are some steps you can take from the very beginning to ensure your personal assets are protected when your business assets are on the brink of disaster. The following are just a few to get you started.
- Maintain Separate Accounts
Starting a business might begin with a loan from your personal assets, but you should open a separate bank account and keep that money there. When your business does well enough, you can pay yourself back. Your company checkbook and credit cards should have your business name on them. Your personal checkbook and credit cards should only have your personal name on them. When you purchase something for your business, don’t forget to use your personal account. If you need to make a personal purchase, don’t talk yourself into using the business account “just this once.”
- Be Professional and Proper
If you don’t want a creditor to pierce the corporate veil, be sure you’re always professional and proper. Make sure all your contracts and agreements are honest and in writing. Hire subcontractors that are licensed, bonded, and insured to provide you with any services. Don’t ever allow individuals to work “under the table,” but always hire legal employees and pay them accordingly.
- Buy Business Insurance
One of the best ways to protect your business is by purchasing the right type of business insurance. There are a lot of different options out there, and the specifics of the way you run your business will help determine the type of insurance coverage you need. For example, if you rent heavy duty machinery, you’ll need coverage for more risky situations than someone who owns a produce stand.
You should also have personal insurance. This includes health insurance, life insurance, car insurance and any other types you feel you need in your life. Business insurance does not roll over to your personal life, nor should it.
- Get Creative with Ownership
If your business is in your name, you may want to get creative with ownership of your personal assets. For example, you could place the deed of your home into your spouse’s name as his or her separate property. Your personal cars could also be in your spouse’s name, etc.
Calling Your Attorney
If you want help keeping your business and personal assets separate, or if you’re facing bankruptcy in either aspect of your life, an attorney may be able to help. Contact a lawyer, like a bankruptcy lawyer from Darrell Castle and Associates, PLLC, today.