Asset Protection: How to plan for the unexpected
In business, as in life, things can change unexpectedly, and not always in a positive way. The key to success is to be prepared for almost anything. Easier said than done.
Thankfully there are some simple steps we can take in order to protect our assets, and our professional futures.
Thousands of lawsuits are filed in Australia each month and, if one is filed against you, anything you own – property, businesses and even personal savings – could be at risk.
As your brokers/advisors, we can help you to decide which asset protection techniques are right for you.
What is asset protection and why do we need it?
Asset protection is, in simple terms, safeguarding your wealth or collateral (assets) from creditors, debtors or lenders, in a legal and strategic way.
Even if your business is small, if you have any assets in your name, they could be at risk so it’s worth taking some time to investigate what kind of asset protection could serve your needs in the best way.
Effective asset protection should be in place before a claim is made against your business, or before a liability occurs. And while we hope for the good, we need to prepare for the bad, so if you accidentally release a defective product into the marketplace or your finance team make a mistake and the Australian Tax Office come knocking, parts of your business and livelihood are not at risk.
So, where do you start?
Get your contracts and procedures in order
The best way to protect you and your business against any kind of liability is to operate legally and effectively. If you’re negligent, or even worse fraudulent, you’re putting yourself at significant risk.
Ensure you have:
- good lease agreements for any rental properties or equipment
- all property and equipment registered in your company name
- subcontractor agreements and contracts on every project
- written, witnessed, hard-copy agreements (don’t rely on email) for terms for outside relationships with suppliers
If you work with people outside your business, make sure they are fully licensed and insured in their own right – this includes everyone from casual contractors to legal and tax professionals.
Set up the right business entity
As a sole proprietor, your personal assets could be vulnerable should you be sued.
Setting your business up as a limited liability company, a corporation or limited partnership, can be a huge step in legally separating your personal and business assets.
Not sure what entity suits your business best? As your broker/advisor, we can point you in the right direction.
Get the right insurance
As your broker/advisor, it is our responsibility to present you with the different kinds of insurance you might need to properly protect your assets should your business come under threat.
These can include, but are not limited to:
Business interruption insurance – Costs keep coming, even if there is a pause in revenue, and this kind of cover can help you maintain payments if a temporary crisis occurs.
Management liability – Running a business comes with risk and this insurance can help protect you from claims arising from deliberate or accidental mistakes, or even fraud, perpetuated by an employee.
Public and products liability – This type of insurance covers your business for injury or damage to third parties arising from your premises, business operations or products.
Talk to us about what kind of cover you need and don’t let one accident or mistake put your personal life or business assets at risk.
