Setting Up Your Business Correctly
The first step in protecting yourself from personal liability is to setup a business entity. When you first start a company, you are usually a sole proprietor, which means you are personally liable for things. You need to use a site like LegalZoom and setup a company – either an LLC or corporation, to hold the assets of your company. By having a business entity setup, if you are exposed to liability issues, only the company is liable, not you personally.
However, just because you have an official company setup, doesn’t mean that you can’t lose all the money in the company due to liability. This is where insurance can be helpful. You can get liability policies to protect your business, so if you are sued for an issue, the insurance can help you.
You can get insurance policies to cover all types of issues: liability from damaging a customer’s property, liability insurance for company vehicles, and even insurance to protect you if you were to have errors in contracts.
If you’re in business, you never know when there may be an accident that causes damage to someone else’s property, and you don’t want to lose your business because of it.
Protecting Your Assets
Finally, you need to make sure that you protect the assets of the company by not “piercing the veil”. This means not using company accounts for personal reasons, and vice versa. If you pay yourself, do so via check and keep accurate records. If the legal entity of the business isn’t protected, you could still be personally liable for any damages your business causes.
Latest posts by Sean Bryant (see all)
- Plan in your 20s and Benefit in Retirement - September 23, 2016
- Save Money by Shopping the Seasonal Sales - September 19, 2016
- 4 Personal Finance Lessons You Must Learn Before you are 21 - September 13, 2016