As of 2023, the United States is home to more than 33.1 million small businesses, employing 61.7 million Americans. As a business owner, you want to do everything you can to protect your hard-earned money. Individually, you want to make sure that real property, stocks, and other investments are protected.
If you want to find out more about asset protection, our PA business lawyers are ready to find tailored solutions that fit your individualized needs.
Importance of Asset Protection
The legal process of protecting your assets from creditors is known as asset protection. Your assets are at risk if someone tries to retrieve the money you owe them. If you fail to protect your assets, your home, car, and other bank accounts may be at risk if you are sued.
A common way that creditors attempt to get back money owed is by filing a judgment lien. In Pennsylvania, a judgment lien can only be filed against real property. The lien attaches to the property, so when you sell your home, whatever is owed to the creditor will be taken out of the proceeds.
Ways to Protect Your Assets
The best option to protect your assets will depend on your specific financial situation and needs. Your options may include:
Forming a Limited Liability Company (LLC)
A limited liability company, or LLC, is a business structure that allows the business’s assets and debts to be separate from an owner’s personal liability.
Each state has its own laws pertaining to LLCs. No matter what state you live in, LLC owners are known as “members.” An LLC is essentially a hybrid of a sole proprietorship or general partnership and a corporation. The Commonwealth of Pennsylvania allows single-member LLCs with no maximum number of members.
An LLC is a pass-through taxation, meaning that after bills are paid out of the LLC, the members will pay personal income tax on the remaining revenue. Not being subjected to corporate taxes, members are able to earn more income.
Acquiring Liability Insurance
There are certain situations in which a person is required to carry liability insurance. If your vehicle is registered with the state, you are required to carry auto insurance. If you have a mortgage on your home, your lender will likely require you to have homeowner’s insurance.
In contrast, business owners in the Keystone State may be able to avoid purchasing liability insurance. While owners may think they are saving money, this is usually not the best decision. If a customer slips and falls in your store and sues you, if you do not carry general liability insurance, the patron may come after your personal assets.
Every business is unique, meaning that owners must examine their business structure to determine how much liability coverage they need. The amount of liability insurance will depend on the type of business you operate, how many workers you employ, and the size of your store or office space.
Executing a Prenuptial Agreement
Nobody goes into marriage thinking that their union may be temporary. Even if you think your love will stand the test of time, it may be in your best interest to sign a prenuptial agreement.
A prenuptial agreement is a legally binding document signed before a couple gets married. A prenup will detail what each person expects out of the marriage and how assets and debts will be divided in the event of divorce. If you do not sign a prenup, your spouse may be able to come after your business assets if you split up.
Ready to Learn More? Contact our PA Business Lawyers Now
If you are interested in taking your business to the next level or want to protect your hard-earned money, give us a call. The attorneys at Mette, Evans & Woodside are available to answer any questions or concerns. To schedule a consultation with our legal team, contact us online or by phone at 717-231-5219.