A Guide for Protecting Your Business Assets

Protecting your business assets will be your saving grace in a crisis. You can manage your risk of losing your business by having a strong asset protection plan in place. Due to the pandemic, too many businesses have not made it out alive. With the devastating diminished profits, loss of income, countless layoffs, import/export limitations, and broken supply chain, now is the time to make sure your business is more protected than ever. It is up to you to learn how to better manage and protect your wealth. Here is a guide for asset protection strategies that may help you keep your business afloat in a time of need.

Properly Insured

First and foremost, the best line of defense for asset protection is a strong insurance plan. Business owners can consider several insurance types:

Business Insurance

Business insurance is a foundational coverage that may include liability insurance, property insurance, business interruption insurance, and more. Its main purpose is to act as a safeguard for the business property and offer liability coverage in the event a lawsuit arises. Regardless of business size, business insurance is a must-have.

BAP

Business Automobile Policy (BAP) is coverage for business vehicles with additional liability protection. If you and/or employees use vehicles for business purposes, it will be worth the investment in case of a lawsuit.

Umbrella Insurance

Commercial umbrella insurance protects everything that your other insurance policies don't cover. To avoid creditors seizing your assets and wages when your remaining policies cannot cover settlements, umbrella insurance will be needed.

How Business Entities can Be Used to Protect Assets

Do not make the all too common mistake of tying your business and personal assets together in one bundle, as this will make all of your assets extremely vulnerable and put you at risk of losing everything at once in an unfortunate incident. Be sure to make a clear distinction between your business and personal assets on paper. You can do this by creating a business entity. The options for this include:

• Limited Partnerships (You're liable only for the investments you've made in the business).
• Corporations (Protects personal assets in case of a business lawsuit).
• Limited Liability Companies ( Strongest asset protection with less restrictions on ownership).

Create an Asset Protection Trust

Establishing an asset protection trust may just be one of the best things you can do for your business and future cash flow. With a strong asset protection trust, creditors can not mess with your assets, and lawsuits won't affect your assets. Although these plans can be quite complex, it would be smart to consult a financial and wealth management advisor. The two main types of asset protection trusts are revocable (less protection but can be altered) and irrevocable (better protection for your business assets but the terms can not be changed, a trustee will have control over those assets). You can speak to an insurer for more guidance and to help you weigh your options.

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we help our clients decide which of these options is best for them based on their current situation and risk factors. Contact us at 1-855-977-1842 or insureme@dsayles.mysites.io for a consultation!