Securing company assets is vital given that these days everybody's favorite pastime is making a claim or starting a lawsuit. If your company is being sued then it is important to make sure that the assets are secure otherwise the whole business could be at risk. Obviously, when you set up a company it is important to seek legal advice but this can often be prohibitively expensive so here we are going to take a look at 7 ways to secure company assets.
1. Choose the Right Business Entity
This is one of the most important decisions you can make. If you are starting out as a small business you may set up your company as a sole partnership, and this does make sense initially but you are running the risk of losing all your personal assets if you are sued, as they are left completely exposed. If you do start in this way make sure that you change the entity of your business as soon as it becomes profitable to an LLC or an S corporation, which will afford much more protection over your assets.
2. Keep a Corporate Veil
You must separate your personal life and finances from your business life even if you have structured your company as an LLC. This is because if you are sued the prosecutor will be looking for any slight overlap between the two to try and get to your personal assets. You must have a separate bank account and must never use your personal name, always the company name on any correspondence. If you are unsure of any of these steps it is always wise to seek more information, but at the minimum make sure you keep full corporate records and be as squeaky clean as possible to keep those hawks at bay.
3. Run Your Business Legally
It is incredibly important to run your business as cleanly as possible. Always make sure you have a contract for every transaction or project. Make sure that all leases, property, or hire purchase contracts are in the name of the company and only hire staff that is legally able to work. Do not be tempted to employ cash in hand labor or it could come back to bite you where it hurts. You are trying to make it as difficult as possible for anyone to pick holes in your business and therefore claim it is an extension of you personally, thereby permitting the seizure of your personal assets should you lose a lawsuit.
4. Take Out Insurance
Making sure you have the correct insurance policy does not mean that you can go against everything we have learned so far, it is just what the name suggests: insurance. Sometimes the unavoidable happens so it is important to be protected in this scenario. Consider business and public liability cover and depending on the size and nature of your business it can be wise to take out umbrella insurance that can payout on your behalf if you find yourself on the wrong end of a legal judgment.
5. Move Assets
If you are married an option, albeit a slightly risky one, is to transfer some of your personal assets into your spouse's name for protection, as normally creditors cannot seek the assets of a spouse. Of course, if you have a mortgage in both your names this won't make any difference, and if you divorce it may be impossible for you to get your assets back, however, in the right circumstances, it can be a good tool to keep your assets separate from your business.
6. Encumber Assets With Liens
A rather sneaky way of making your assets less attractive to a potential creditor is to encumber them with liens. If your house or property has a 95% credit line secured against it then it becomes essentially worthless and hence it is often not worth the while of any creditor coming after it. This method isn't just limited to your home, it can be used against any high worth asset that you have, and can raise funds against.
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Help! My Friend Is a No Show
Dear Armchair Psychologist,
I have a friend who doesn't reply to my messages about meeting for dinner, etc. Although, last week I ran into her at a local restaurant of mine, it has always been awkward to be friends with her. Should I continue our friendship or discontinue it? We've been friends for a total four years and nothing has changed. I don't feel as comfortable with her as my other close friends, and I don't think I'll ever be able to reach that comfort zone in pure friendship.
Dear Sadsies,I am sorry to hear you've been neglected by your friend. You may already have the answer to your question, since you're evaluating the non-existing bond between yourself and your friend. However, I'll gladly affirm to you that a friendship that isn't reciprocated is not a good friendship.
I have had a similar situation with a friend whom I'd grown up with but who was also consistently a very negative person, a true Debby Downer. One day, I just had enough of her criticism and vitriol. I stopped making excuses for her and dumped her. It was a great decision and I haven't looked back. With that in mind, it could be possible that something has changed in your friend's life, but it's insignificant if she isn't responding to you. It's time to dump her and spend your energy where it's appreciated. Don't dwell on this friend. History is not enough to create a lasting bond, it only means just that—you and your friend have history—so let her be history!
- The Armchair Psychologist