Though it has been a long road, more women own businesses in the United States than ever before—so much so that Forbes magazine recently identified women-owned businesses as one of the fastest growing sectors of the American economy. This should come as no surprise, as female-owned businesses doubled in the last seventeen years.
Because so many of them must juggle both their duty as CEOs with their families, essentials have a way of getting lost in the mix. One such necessity: asset protection planning. While business planning procrastination may be worth it to attend one of your children’s recitals or on a date night with your partner, the risk of insufficiently protecting your assets can seem insignificant until everything starts going wrong. A little forethought can go a long way toward eliminating the negative impacts this can have on both your business and your family.
Where do you start? Below are some helpful tips for protecting your assets:
Craft a business succession plan
This is particularly important if you are in business with one or more partners. The death of one partner will, if not otherwise planned for, pass their share of ownership on to their spouse or children—and now you are in business with someone you never thought you would be. This can be a real danger to your business interests, no matter how well-meaning their family may be. One option is for partners to purchase life insurance policies on one another to allow for the buyback of the shares from the deceased partner’s estate. It’s even better if you put the terms of the buyout in a Buy-Sell Agreement. Even if you don’t have a business partner, crafting an exit strategy is important so that you can take the steps that need to happen along the way to make your desired exit possible.
Bring together people you can depend on
A successful entrepreneur—male or female—is at their best if they have a great team behind them. This doesn’t always have to be staff – it can also be professionals that you turn to for guidance. Remember, there’s a difference between seeking wise counsel and cheap advice. At least, it is important to have an established relationship with a business attorney, a financial planner, a CPA, and a business coach so you have the resources on call when you need them.
Protecting personal & business assets
It is vital that every entrepreneur think through which business structure is right for them. Ideally, you did so as or even before your business really got off the ground. Limited liability companies and corporations offer extensive protection from personal liability for the business liabilities, keeping your personal assets nice and secure. You can also use certain types of trusts and other legal structures to protect business assets from either personal creditors or divorce.
Warning: Neither a sole proprietorship nor general partnerships provide protection for your personal assets.
Are you a female business owner or entrepreneur? We can help. We are entrepreneurs ourselves, and we know how to utilize the options available to you and your business. Go ahead, contact us today to learn more about our personal approach to business planning by scheduling a small business consultation session.
You can call our office at 612-206-3700 or by email via our online contact form.
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