It’s natural to feel pride if your small business brings in a few million dollars a year. However, rather than risk that hard-earned wealth, it’s worth implementing an asset protection plan. This safety measure becomes arguably more important as revenue increases because with more money comes more lawsuits—whether they’re warranted or not. If you haven’t considered ways to protect your financial security now that your business is relatively successful, here's what you should know. 

Why Is Asset Protection Important?

Asset protection is a proactive measure that aims to shield liquid cash and valuable property from judgments and creditor claims. In other words, it allows business owners and wealthy individuals to keep various assets out of judicial proceedings. No one ever plans on being sued, but because we live in a fairly litigious society, it only makes financial sense to protect your assets in anticipation of civil suits that aren't resolved in your favor. 

What Kinds of Assets Should Be Protected?

Generally speaking, you should consider anything of value when devising an asset protection plan. This includes real property, company vehicles, valuable tools, and expensive equipment. As long as the asset belongs to the business, it’s vulnerable to seizure in the event of a legitimate claim. 

What Are My Options Regarding Asset Protection?

There are a variety of ways to protect company assets. Purchasing business liability insurance is a solid place to start; however, as long as the company is earning a significant amount of revenue, you may need additional vehicles to protect your financial security.

For example, it may be advisable to transfer certain assets to an irrevocable trust, which cannot be dissolved by creditors. It’s also wise to establish a business succession plan long before you need it. Should something happen to you, such a plan will ensure the company’s assets are not simply “up for grabs.”

It’s important to note that the structure you use to organize the business may also provide a certain amount of protection when it comes to your personal finances. Corporations generally offer the most protection because they limit how much personal liability the officers, directors, and shareholders shoulder. 

To learn more about asset protection, register for a seminar hosted by Economic Strategist. Based in Addison, TX, and serving clients throughout the Dallas-Fort Worth Metro area, this firm is comprised of knowledgeable advisors who are equipped to address every aspect of wealth management. Their areas of expertise include tax preparation, irrevocable spendthrift trusts, and business planning. To discuss your specific needs with an advisor, call (214) 383-1350 or reach out on their website.