How do I protect my personal assets?
There are plenty of businesses that fail. And it’s important that if your enterprise takes a turn for the worst, your personal assets are protected.
Some experts suggest reducing your liability by operating in a company structure, as opposed to a partnership agreement which can produce more legal risks. You should also be careful of personal guarantees, which are often required to be signed for finance agreements – don’t sign them unless you feel you have no other choice.
Also consider increasing your contributions to superannuation, which can often act as a hedge if something goes wrong in your business.
Many business owners ignore the possibility of divorce or the breakup of a de facto relationship, and how it could affect their business. Some experts recommend drawing up a financial agreement to show how your finances would be split if a separation occurs.
Inventory every one of your assets and accounts, and update it on a regular basis. Record their values and keep the data in a safe place.
Be extremely wary of any contracts you sign and examine how they could affect your assets if the business fails. Also, consider buying insurance for all your personal assets should the business fail.