Everyone who opens a business does so with the intention of making a profit, so why do so many businesses in Fremont, Livermore, and elsewhere end up failing? Even worse, almost any holiday party or barroom bull session will involve someone telling a story of how his long-standing financial woes began with a bad business decision. The fact that businesses sometimes fail to make a profit and have to close is just a normal part of capitalism, but no one’s personal financial situation should be ruined because of a business failure. The best thing that business owners in the East Bay can do to avoid this problem is too seek professional legal advice regarding asset protection, and to do it now, rather than before the big financial problems start.
What Is Asset Protection?
Assets are anything you own, including money and other types of property. Assets can belong legally to you or to a business entity. When a business closes, it liquidates (sells) its assets and uses the money to pay as many of its debts as it can. If the money is not enough to settle all the debts the business incurred (and it usually isn’t, or else the business would not have closed), creditors will come after the business owner’s personal assets, if they can, to pay the remainder of the debt. Through asset protection, business owners can avoid having to use their personal assets to pay business debts.
Asset protection often takes the form of setting up a business entity to keep the assets of the business separate from your personal wealth. The differences among the various types of business entities have mainly to do with taxation and with what kinds of asset protection they offer. The limited liability company (LLC) entity designation is especially popular for the asset protection it offers.
When to Set Up a Business Entity for Asset Protection
The time to think about asset protection is now, before you even start your business. You will need asset protection structuring if the business closes, but you will also need it if your business becomes a party in a lawsuit. Likewise, business asset protection can reduce your financial losses in a divorce, but don’t wait until your marriage is in trouble, or even until you get married, to think about asset protection.
Contact JGPC Law About Asset Protection for Businesses
Jim Gulseth and the other attorneys at JGPC Business & Corporate Law keep asset protection in mind whenever they help someone establish a business. Contact JGPC Business & Corporate Law at (925)463-9600 about asset protection.