Running your own business can be rewarding both personally and financially. That said, it does not come without challenges.
There may come a point when your business is exposed to creditors. What steps can you take to protect your company from claims?
Structuring your business appropriately
There are numerous types of structure that your business can take depending on your circumstances. For instance, sole proprietorships tend to be the choice of smaller businesses that operate as a side project. The benefit of a sole proprietorship is that you can get up and running quickly. The downside is that all of your assets, including your own personal assets, are exposed to creditors.
Establishing a Limited Liability Company (LLC) is relatively straightforward and it offers you many of the same benefits as a sole proprietorship. The key distinction is that your personal and business assets are kept separate. Your home, vehicles, and personal savings are not accessible to creditors.
For larger companies, the structure of choice is often a corporation. A corporation can be more expensive to set up, but it shields its owners from personal liability from creditors.
Choosing the appropriate structure in your circumstances is a proactive step to protect yourself from creditors.
What if creditors are already calling?
There are no guarantees that creditors won’t come calling. If this happens, it’s important to insulate yourself and your company by seeking legal guidance.
We help businesses protect themselves from creditors both proactively and reactively. Book a consultation to discuss your options.