ASSET PROTECTION: Just as sure as April showers brings May flowers, the economic fallout of COVID-19 pandemic will rain down on many small businesses.
A key reason for incorporating your business is the limited liability protection that a corporate entity gives you as a business owner - this in turn protects your personal assets from being at risk to creditors of the business.
However, as your company becomes profitable, the business assets (and the accumulated retained earnings) are at risk of being collected against by potential creditors.
So who are your potential creditors? They are your suppliers and lenders, but they can also be your employees, customers, or any other person who may have been injured or had property damaged due to your business activities. While commercial liability insurance is always a good idea as part of a liability protection plan, it may not always be sufficient and does not protect your assets against suppliers and lenders.
Our goal in creating a comprehensive asset protection plan is to prevent or reduce your risk of having assets collected against by insulating your business and personal assets from the claims of potential creditors. Our asset-protection plans include lawful strategies that can deter a potential claimant or help prevent your assets from being seized after a judgment.
Unfortunately, most small-business owners are unaware of the options that are available to protect themselves until its too late. Timing is critical – an asset protection plan must be put in place before a creditor comes knocking on your door and before you become “unable to pay your debts as they become due”. Once an unpaid debt turns into a claim, then any attempts to start protecting the business assets will be useless. The courts will consider those late actions as fraudulent attempts to defeat known creditors.
The strategies we most often use in asset-protection planning are separate legal structures such as holding corporations and sister corporations, along with registering security interests between separate entities. Determining which strategies that will work best for your business depends largely on the type of assets your business holds, the level of risk your business activities are exposed to, and the types of creditors that are most likely to pursue claims against you.
As part of our efforts to help small business during the COVID-19 crisis, we are offering a free consultation to review your current situation and corporate structure to determine what options are available for protecting business and personal assets. It could be as simple as having a proper will and power of attorney in place.
If you haven't already put your asset-protection plan in place, don't let the fallout of COVID-19 rain down on you and your business.
Please email us at: firstname.lastname@example.org to schedule a free consultation to discuss how we can help you protect your business assets.