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Protecting a business asset

Forming and successfully operating a business involves commercial accomplishments and regulatory compliance. Additionally, businesses must rely on commercial law and other statutes to protect their assets from being lost.

A business asset is equipment, infrastructure, stocks, bonds, bank accounts, the cashable value of insurance, or anything else that is valuable to the business. As a business grows, its assets also increase and diversify. Each asset acquires a risk profile involving catastrophes, natural disasters, lawsuits, and malicious individuals, all of which can quickly wipe out business assets.

Unprotected business assets, and even personal assets, can be lost through litigation. Inside litigation involves lawsuits by employees, clients, partners, and contractors. Outside litigation involves litigants who are not directly involved in the operation of the business but are seeking compensation for alleged damages or injuries from its operations.

Business formation can help protect assets. A limited liability corporation may shield single-owner firms and provides tax advantages and flexibility. An LLC protects against inside and outside liability through changing order protection. When creditors seek to garnish personal income, it must first satisfy the debt though business assets. A general body meeting can stop paying salary and provide additional protection. Assigning operations to key managers through a standard operating agreement also helps protects personal assets.

A corporation is a more formalized structure for business operations. It has many of the advantages of an LLC but allows the business to go public, improve revenue avenues, and raise funds from the public by selling securities. However, publicly-traded stock can expose the corporation to creditor lawsuits.

Another form of protection is a limited partnership. A business partner provides funds and investment while enjoying passive income. The general partner oversees business operations and assumes most of the liability.

A person can also protect their personal wealth by purchasing insurance where its cash value is protected and having retirement benefits that are shielded under the federal ERISA act. Assets may be moved into an irrevocable trust, too, which also shields property in a divorce.

A qualified attorney is prepared to assist with appropriate business formation. Legal assistance can help assure that assets are protected.

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