How to protect sole proprietor business assets from personal assets?
Garrett Sutton at Resource Nation tackles this question.
If you operate your business in the form of a sole proprietorship or as a general partnership, these businesses are not registered entities, which means that your personal assets are not insulated from those of your business.
As an example, if you’re a sole proprietor and an angry customer sues you, any assets you own such as your house or car are not protected. Nor are financial assets such as your bank account. These can all be taken should a judgment be found against you.
To protect yourself, use a registered corporate entity, such as a C or S corporation, a limited liability corporation, or a limited partnership.
You’ll need to keep your company’s registration up-to-date, hold annual meetings and keep annual minutes, keep business clients separate from your own, and avoid signing any business-related documentation in your name.
This keeps your own assets separate from those of your business. By the same token, you are also protected from any debts or disasters incurred by your business.
MyCorporation.com is offering free incorporation and Limited Liability Company (LLC) services. Business owners can call 1-877-692-6772 or go to mycorporation.com and mention or type in code MYFREE to register their business for free. This offer saves business owners $149 and will be available until July 31. It does not include shipping and state filing fees.
Entrepreneurs can also go to smallbusinessunited.com to get MyCorporation’s free incorporation services and other free Intuit products, such as QuickBooks Simple Start and Intuit Websites, to help them start and grow their businesses.
Editor’s note: Business owners should seek professional advice regarding their financial liabilities.
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