Every business owner makes the decision to assume some portion of risk when they operate a business, but no one wants that potential risk to affect their personal wealth. Unfortunately, there are all too many business owners who neglect to implement the correct asset protection strategies to firmly separate business risk from their personal assets.
Here are four steps business owners can take to protect personal assets from business liabilities:
Have adequate insurance. If you own your own business as well as the building that houses your company, you will need to have different insurance policies for both. Having the right kind of business insurance makes your own personal wealth less of a target in case of a business lawsuit.
Form a limited liability business entity. Setting your business up as a corporation or limited liability company (LLC) will better protect you in case of a business lawsuit than if you establish your business as a sole proprietorship.