Table of Contents
- Let’s get right into it
- Separate Personal from Business Assets
- Invest in All Applicable Types of Insurance
- Workers’ Compensation Insurance
- Invest in Anti-Cybercrime Services
- Move Funds Into Retirement Accounts
- Have the Right People in Your Legal Team
Some good news for taxpayers: the number of IRS audits continue to show a downward trend to asset protection
In 2019, these audits only occurred in 0.45% of individual tax returns. That’s a 0.14% reduction from the year before, and a whopping 1.11% decrease from 2010!
Still, this is only a small reduction in the risks that your business assets face. Your business can get sued by clients, third-parties, and even your own employees. You can lose your properties in a fire, a flood, or any other disaster.
That’s why you need to implement the right asset protection strategies as soon as you can. This way, you can further mitigate the potential risks and losses that your business may face.
Ready to learn the best business wealth protection strategies you should employ now?
Let’s get right into it
Separate Personal from Business Assets
Splitting your personal and business assets lets you take advantage of tax deductions.
For instance, you can write off business expenses such as the purchase of a vehicle. You can even deduct 100% off of some equipment purchases under the depreciation tax break!
Asset Protection Planning
This “separation” is also one of the best steps on how to protect your assets from a lawsuit. For instance, in the event of a lawsuit against your business, only your business assets will be at risk. Another is in the case of a business loan default — creditors will only be able to go after your business assets.
If there’s no distinction between your assets, you can lose all of them. You may even lose part of your home (and its contents), in the event that you declared it as your home office.
That’s why one of the first asset protection tactics to employ is asset separation. Besides, this also makes it easier for you to keep good books of your business expenditures. This then helps you reduce the odds of the IRS auditing both your personal and business records.
Invest in All Applicable Types of Insurance
There are many types of business insurance you need, but these three should be your priority.
Commercial Liability Insurance
Get commercial liability insurance to protect against lawsuits filed by third parties.
This type of insurance protects your firm in case someone gets hurt or ill while on your premises. It also covers your business if someone gets injured due to the actions of one of your employees.
Workers’ Compensation Insurance
All states (except for Texas) require most employers to get workers’ compensation coverage. It’s due to this mandate that about 140 million US workers carry this coverage.
Failure to get this insurance for your people gives them the freedom to sue you in case they get injured or ill at work. The chances of this are high, seeing as 2.8 million work injuries and illnesses occurred in 2018 alone. Moreover, the government can slap hefty fines and even criminal charges against you.
Commercial Property Insurance
In 2018, 7.2 million property crimes occurred in the United States.
There were also more than 1.31 million fires that happened in the country at that time. Many of these fires burned down commercial structures (and their contents).
Commercial property insurance can help guard your wealth by covering your firm’s properties. These include any commercial building or structure, such as your office. It also covers equipment and other physical assets owned by your business.
This type of insurance kicks in if the loss of your properties arises from burglary or larceny. It also covers assets and properties lost in a fire, and in some cases, during a natural disaster.
Invest in Anti-Cybercrime Services
In 2019, one study found that over four in 10 data breaches targeted small businesses.
What’s even worse is that six in 10 of these victims had to close down for good. With the high costs of cybercrime, victimized SMBs had to shut down within half a year from the attack.
Cybercriminals Can Steal not Only Your Business
Cybercriminals can steal not only your business data but that of your clients’ too asset protection. They can steal banking details, social security numbers, and other sensitive info. If this happens to your customers, they can and they likely will sue you
That’s why anti-cybercrime services should be part of your robust asset protection plan. If possible, go for managed IT services, or at least, have a cybercrime specialist in your IT team. You should also consider getting cybercrime liability protection to further protect your firm.
Move Funds Into Retirement Accounts
A measly 0.8% to a little under 1.4% — that’s the average annual percentage yield for bank savings accounts.
So, rather than growing your money in these low-yield accounts, why not put it in a retirement plan?
401(k) accounts, for instance, can give you a much better deal once you’ve retired. Funds in such accounts grow faster, as you can invest them in stocks, bonds, or both.
Best of all, the money that you have in these accounts is usually protected from creditors. This makes them an ideal strategy for asset protection.
Have the Right People in Your Legal Team
Most businesses, even small ones, need an attorney right from the beginning. For starters, they can determine the best business structure for an organization. They help their clients decide if going solo, partnering up, or being an LLC business is the best route.
There are also lawyers who can help with taxes and licenses, as well as intellectual property. Some also specialize in employment laws and contracts.
Asset Protection Associate
As your assets grow, however, you should consider having an executor of will duties on board. They can help you defend your will against anyone staking a claim on it. This type of lawyer can also defend claims and assist you in making settlements.
Of course, executors will make sure that your assets go to the people you want them to go to in case of your passing.
Don’t Delay Implementing These Asset Protection Strategies
There you have it, the complete guide on the asset protection strategies you should be doing now.
Regardless of the age of your business, it surely has assets that you need to protect. That’s why you can’t afford to delay protecting them, otherwise, you may just lose them all.
Ready for more business know-how straight from the pros? Keep scrolling our blog!