Business asset protection. Most business owners think about it but few action it. Asset protection status with actioning affordable, tested and tried strategies. Most of them are simple habits that should be utilised as common practice.
The intention of business asset protection is not only to safeguard the firm’s assets but also provide protection in the event of a legal claim or lawsuit against the proprietor or firm itself.
Below we have outlined 5 crucial and easy to follow steps that all firms can take to better safeguard their assets.
1. Choose the correct corporate structure
There is a reason a company exists so commonly, even with small founders. The corporate structure of a company acts as a separate legal entity than its owner.
There are certainly also a number of tax-planning considerations. Operating as a sole trader in a number of cases is not always the ideal choice for asset protection. As a sole trader, personal assets tend to be completely exposed to any potential or current legal case.
Setting up a company (entity), such as a limited liability company (PTY LTD in Australia), is an important step in the protection of your assets, and long term scalability of operations.
2. Screen new hires
Business owners would be surprised to learn that one of the most simple ways for creditors to attack assets of business, or even personal assets in the case of a potential court ruling, is if it is proven that the business or its owner acted negligently. These items can be avoided to some degree by implementing a sound and informed hiring process. For example, running a police check before you finalise employment.
Third-party screening check service providers whose main work is to conduct background screening for businesses or employers is commonly used by Human Resource workers all over the globe. These providers as a general rule, are better equipped to conduct thorough and accurate background screening, as they adhere to best practice guidelines and processes. For example, in Australia, Australian National Character Check provides police clearance checks to companies and HR departments all over the country. Furthermore, the checks are a national level check; For example, a state based check like a police check NSW is in essence the same as a national police clearance.
3. Utilise Contracts
Putting property items in the company’s name, utilising solid subcontractor agreements and contracts on every project that is undertaken and not relying on information communication (like verbal conversions or telephone conversations) and even formal communication (like emails) for terms in an important relationship.
The firm should make a standard process of only using the services of licensed, insured, and registered professionals to help or work on projects within the business. This includes and is not limited to the use of legal attorneys and tax advisors (registered accountants), contractors and third party service providers.
4. Establish controls
If you’ve set up the structure of a company, don’t think for a moment that just having the entity as its standard structure of a separate legal entity will save you or your business when it comes to potential lawsuits.
Well organsanised organisations must maintain separate bank accounts and checkbooks for the business. Furthermore, they must make the use of the company’s name on official work documents. Title the property in the name of the company or if necessary, for further protection under a corporate or family trust arrangement if the shareholders permit. The entity should at all times be on top of its accounts. This means maintaining records.
5. Cover the entity with business insurances
Proper businesses insurances are one of the most important parts of any well-organized business and should be included even in startups. Insurance gives the ability to take care of an unforeseen or unexpected incident that may in some cases be the difference between the business closing down or running strongly into the future.
As a rule, some insurance policies won’t cover fraudulent, criminal or negligent action, enforcing the need for better background and police checks as was explained in point two above.
Wrapping up
So do you have a business that is already operating or are thinking of starting a new one? Asset protection can be described as a crucial step that may even determine if or not the organisation will survive in the long term. Take the wise step and protect assets.
