Asset Protection Strategies
It’s the first step but certainly not the only one.
It’s unfortunate that way too many people have lost everything to a business liability incident which could have been easily been avoided if an effective asset protection plan was put in place.
Now the whole concept behind asset protection is simple. A creditor can only seize the assets owned by a debtor.
In a corporation, the assets are owned by the entity itself so in order for a creditor to seize the assets of the corporation; it must first pierce the corporate veil.
Did you know that corporate veil piercing is the most litigated issue in corporate law today?
In order to minimize your chances you should follow the three asset protection strategies listed below:
- Maintain up-to-date corporate records – Even though the records of each entity have different names, they serve the same purpose. For example, articles of incorporation for a corporation serve the same purpose as articles of organization for an LLC. By maintaining these records, minutes of board meetings, and so on you uphold the integrity of separation.
- Record an accurate list of assets owned by your business – You can download the forms and agreements you need on the Allbusiness.com site.
- Establish credit in the name of your business – Get listed with the business credit bureaus and start building business credit. By acquiring and utilizing credit solely in your company’s name prevents the commingling of personal and business assets.
While there are many other ways you can further protect your personal and business assets let these three simple yet vital strategies serve as a helpful reminder.
Even though corporations have been recognized as solid forms of asset protection for the longest time the ‘corporate veil’ can be pierced if you don’t take the proper steps to protect it. Remember, losing money is one thing but losing everything is a catastrophe.
What other asset protections methods are you using?
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.