Owning a business has its set of challenges. Aside from making profits, you also have to keep your business strong and stabilized to attract investors and increase brand credibility.
Keeping a business firm and stabilized is not just about safeguarding your earnings or reputation. It also means providing security and protection for your assets against the risks of theft, lawsuits, and claims. You can lose your business and even personal assets if these risks are not appropriately handled. But if you know the risks involved, you can apply the necessary asset protection strategies your business needs.
Unfortunately, many entrepreneurs don’t always know how to protect their businesses. There are many options available for business and asset protection. A strategic asset plan and a few best practices will undoubtedly help.
Choose the Right Business Structure
One of the essential strategies for protecting business assets is to choose the proper organizational structure such as trusts, partnerships, and corporations for its legal arrangement. What will work depends on what kind of assets you own. If you have debt, that will most likely affect your choice, too. The legal structure you choose will also rely on the type of creditors you expect will pursue claims against you.
According to Entrepreneur, sole proprietorship can’t offer you much asset protection. If you choose this structure, even your personal assets can be taken away from you during a claim. The magazine further stated that an essential step to protecting a business is setting up a limited liability company (LLC) or S corporation.
Record and Monitor All Your Assets
Keep a record of your tangible assets, how they are being used, and who is using them. Tangible assets are physical assets that your business owns. It may include cash, vehicles, inventory, buildings, equipment, and other investments. Failing to document them can expose them to theft and misuse. If your assets are stolen or used otherwise than their original purpose, your business can lose money.
A way to track your assets is to use an asset tracking software that can list all the company’s properties, whether big or small, and indicate its location, use, and person in charge of them. It can help you keep informed of the status of your physical assets.
Internal documentation is also vital for your non-physical assets, especially for your digital assets. There must be clear guidelines on how they should be used. Privacy policies, terms and conditions, and other data protection measures should be included in contracts, websites, emails, and blogs.
Implement Security Measures for Your Tangible Assets
But tracking isn’t enough. It would be best to keep your physical assets secured, too. Prevent them from getting stolen or lost by hiring a security team for workplace premises, installing security cameras, and using asset tags.
Register Your Intangible Assets
Intangible assets are non-physical assets that can include software, licenses, patents, trademarks, films, copyrights, quotas, intellectual property, digital assets, and more. You can protect these assets by registering them as the property of your company. If ownership is established, you can prevent future disputes. No one can claim ownership of your assets.
You can register your intangible assets to the U.S. Patent and Trademark Office and U.S. Copyright Office. This is one area that large companies have an advantage over small businesses, especially for IT companies. They have support personnel and legal teams to register their software and digital assets and create contracts on how these assets can be used. But that shouldn’t be the case. If you’re serious about protecting your digital assets, you should hire a software patent attorney who can help you secure your intellectual property.
Install Cybersecurity Measures
But aside from registering your intangible assets, you should also implement cybersecurity solutions to protect them. Software and network security are crucial in preventing cyberattacks, which are often targeted at stealing confidential company information. This is especially true if your company performs digital transactions using payment gateways, so secure them at all times.
Get an Insurance Plan
Build a wall to protect your business through an insurance plan. You should have business insurance, business automobile policy, and umbrella insurance. The first two insurance plans may be enough for most businesses. Lawyer Monthly, however, stated that umbrella insurance could help cover for other assets that the first two plans have left out.
Create an Asset Protection Trust
Creditors and claimants can’t touch assets that are entrusted in an asset protection trust despite lawsuits. You have two options to choose from: revocable and irrevocable trusts.
With revocable trusts, the control is in your hands. It is in your name, and thus, you can change its terms at will. Meanwhile, an irrevocable trust isn’t under your name, so you don’t have control over it. Of the two, it offers more protection against creditors and claimants.
Don’t Wait Until It’s Too Late
Don’t let your assets go without protection. They are your investments, and thus, they are the foundation that runs your business. There are many ways to protect your business, but you can secure yours with the practices in this article. Thus, consider them diligently.