No matter what kind of business you are a part of, whether you are an entrepreneur or a manager of an already established company, it is important to know how to protect your assets and wealth. Below are some of the best tips to keep everything you have earned safe. After all, the last thing anyone wants is for all of their hard work to go to waste! (Image Credit: WorldSpectrum/Pixabay)
Know What Kind of Business You Have
Before you can do much else with your business, it’s best to know what kind of business you actually have. This has very little to do with whether you are a book store, café, or anything else. Instead, the important thing to know is what “business entity” your business is under. The most popular business entities are sole proprietorships, partnerships, LLC, and corporations. However, most people who are just starting out will not have a corporation.
There are some pluses and minuses to having a sole proprietorship. As the name implies, with this type of business, you are running the business entirely on your own. This means that you get to make all the decisions, but it also means you are liable for everything. The biggest minus of having a sole proprietorship is that, if the business is sued, whoever is suing can try to take your personal wealth. This is also the case with partnerships, except the decision-making and ownership of the business is shared.
An LLC (Limited Liability Company) can be owned by an individual, partners, or a group/company/corporation. With these, the success of the business can be shared among owners, investors, or given to the sole owner. The difference is that, if the company is sued, the owner(s) is not personally liable for anything the company owes. This means the owner(s) should not lose anything from their personal bank accounts.
Invest in Liability Insurance
Every business, whether they expect to get into legal turmoil or not, should invest in liability insurance. To be safe, the insurance amount to be paid off in case of a dreadful situation, such as being sued, should be equal to or greater than the worth of the business as a whole. This helps to keep the business entity safe.
With cowork space becoming more popular, business owners and members may wonder if they also need liability insurance. Owners of coworking spaces, like the Studio at Beverly Hills, for example, should invest in liability insurance, just like any other business. Members of these places, whether it be cowork space in Beverly Hills or anywhere else, can also invest in liability insurance. For them, the insurance could cover laptop repairs, theft, or injuries that may occur at the cowork space.
Separate Business and Home Life
Whenever possible, it’s best to keep your home life and business life separate if either are to be a success. As discussed, getting an LLC is one great way to protect your personal assets and wealth. Another way to keep your business and personal life separate is to keep your personal wealth and your business-owned wealth in separate bank accounts. This way, the money does not get mixed up.
Another tip, as far as money management is concerned, is to not only have a separate bank account for business, but to also only have your name on the account. This can be difficult if you are in a business partnership. However, it’s an easy enough task if you are married and don’t want your spouse to use the bank account. Also, by having a business bank account, if you get a divorce, your spouse is less likely to get the money in the account.
Keeping business assets and wealth safe is just as important as keeping personal assets and wealth safe. By following the three simple tips above, you are taking a big step to protecting your hard-earned money!