If you’re running a business or building personal wealth, don’t go risking it with the wrong legal structure.
As a sole trader or an individual partner in a partnership, your personal assets are completely exposed to business liabilities and asset protection is recommended for every business owner.
Most people believe the easiest way to protect their assets is to set up a company. While a company structure limits your liability for debts, losses, and legal issues; it can also mean your house, property and superannuation are protected.
However, the disadvantage of a company is higher set-up and administrative costs because of additional reporting requirements with ASIC.
Another common form of asset protection is to have your assets held in a trust; giving your income and asset distributions more flexibility.
You may even wish to utilise both for added security and a greater degree of separation.
At 542 Partners, we generally use the following 4 basic steps to ensure your personal assets are safe:
1. Where appropriate, we review whether non-business assets should be held by a company, trust or person that is not exposed to the risk of litigation deriving from your business;
2. If applicable, whether assets such as trademarks, patents and equipment should be held by a company or trust;
3. Whether personal wealth can be accumulated in a Superannuation Fund where in most cases superannuation funds are protected from general business creditors;
4. Most importantly, we ensure you have a thorough understanding of your obligations under the terms of any contract you enter into, particularly where personal guarantees are provided.
There is a lot to consider when it comes to the impact of your business structure.
Start protecting your future today.
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