It is a rare business that has little or no risk associated with it, so business owners should be prepared to take the necessary steps to protect their personal assets from potential business litigation. Here are eight asset protection strategies business owners can use to accomplish this:
- Select the right business entity.
If you are operating your business as a sole proprietorship, you have no asset protection. Instead, you should consider incorporating your business as a limited liability company (LLC) or corporation, which provide this important protection for your home and other personal assets if your business is sued.
- Follow the rules of an LLC or corporation.
Selecting an LLC or corporation for the personal liability protection that both provide is not a set-it and forget-it operation. You must follow the rules to keep your LLC or corporation in good standing. Your Florida business attorney can help you with this because if you fail to properly maintain your business entity, your asset protection will be lost.
- Use written agreements and contracts.
Creditors could attack your assets if a court finds you have operated your business in a negligent or fraudulent manner. When conducting any business transactions, be sure your agreements and contracts are in writing.
- Purchase insurance.
Having the proper amount of business insurance gives potential plaintiffs another target with deeper pockets than yours.
- Consider umbrella insurance.
Umbrella insurance coverage is relatively inexpensive — generally a few hundred dollars a year for $1 million to $2 million in umbrella coverage — that can give you peace of mind that what your business insurance may not cover will be taken care of by this extra coverage.
- Consider putting assets in your spouse’s name.
If your occupation carries more than the average amount of risk, it may be an advantage to put the bulk of your assets in the name of your spouse. However, there are pros and cons to this strategy, so you should discuss it with your business attorney before proceeding.
- Use the Florida homestead exemption.
You can protect your primary residence from creditors by taking advantage of the Florida homestead exemption, which is one of the most generous in the U.S. The homestead exemption offers full protection to avoid having to sell your home to meet creditor demands, except under four special situations.
- Utilize tenants by the entireties.
Titling your primary residence as tenants by the entireties offers great asset protection, but is only available for married couples. If one spouse is sued and the home is titled as tenants by the entireties, it will be safe from a legal judgment.
Business owners seeking to protect their business interests should seek a qualified, competent advisor for assistance. Contact one of the experienced Florida business attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com. We offer free consultations to business owners seeking to find the right attorney to meet their business’ legal needs.
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