If you are a business owner, there are several business asset protection strategies you should consider implementing to ensure that your business remains a valuable asset for your heirs.
The time to implement these strategies is before claims arise against your company.
Most of the business asset protection strategies we use involve building walls between the company and its assets.
If you’re a business owner, there are several business asset protection strategies you should consider implementing to ensure that your business remains a valuable asset for your heirs. After all, you do want your children to benefit from your hard work after you’re gone.
Most of the business asset protection strategies we use involve building walls between a company and its assets. One way to build a wall of protection is to separate the ownership of significant assets from the operation of the business itself. Doing this creates an operating company, which faces the majority of the liability, that is as lean as possible while separating the assets that are needed to operate the company from exposure to the liability created by the operating company.
Let’s suppose, for example, that you are operating a pizza restaurant. The business will need supplies, inventory, a building, refrigerators, ovens, cash registers and assorted other assets to perform successfully and at a profit. To implement the asset protection strategy of separating ownership of assets from the operation of the business, we recommend creating two companies. Company One is a Pizza Restaurant. It will own the inventory, supplies and accounts receivables but little else. Company Two will own the building, the ovens, the refrigerators, and the cash registers. Company One will lease the assets it needs to operate from Company Two.
This separation of asset ownership from business operations means that if someone sues Company One, the Pizza Restaurant, none of the significant assets are subject to seizure to pay a judgment because it doesn’t own those assets. Company Two owns the assets and it is not liable on the judgment even though you own both companies. Likewise, if Company One becomes insolvent, the assets owned by Company Two can still be leased to a new startup business.
There are many other business asset protection strategies available. But, the common theme with all of these strategies is that timing is of utmost importance. You must implement these strategies well before your company runs into trouble with creditors or other claimants. Also, these strategies can be complex, so you shouldn’t try to implement anything of them on your own.
Call us at 254-233-7300 to schedule a consultation to talk about your situation.