Maintain protection for your non-business assets.
An important reason for creating a business entity is to protect the owner’s non-business assets if the business fails. A business owner must be vigilant to assure that protection is maintained.
- Avoid giving a personal guaranty for a business obligation, if possible.
- Be certain that personal assets are not titled in the name of the business entity.
- If you have multiple businesses it often is advisable to have separate business entities for each business. If one business fails, it will not take down the other.
- In giving financial statements for the business, avoid the temptation to include non-business assets on the statement as a way of enhancing the financial profile of the business.
Maintaining the protection of non-business assets requires ongoing vigilance by the business owner. If you have questions about a business transaction and how it may affect your non-business assets, we would be glad to meet with you.