Assets Your Business Should Never Own and Never Lose

DOES YOUR BUSINESS OWN EVERYTHING??

The question to consider is, “are you a business owner with valuable assets owned by your operating company?” Have no doubts about this.? It’s a mistake. When your business owns all of its assets, they can all be attached and lost in the event of a lawsuit.? Why needlessly lose these valuable assets if you are sued, or even if your business fails? If your business owns all of its assets, that’s exactly what can happen.? You risk losing all of your assets if a costly lawsuit is filed against your business.? All of your business assets owned by the business become assets that can be reached by creditors… or anyone else who sues your business.?

Valuable assets should be owned by another entity, separate and apart from your business.? Then they’ll be safe from lawsuits and from business creditors. The assets of the business may be owned by a corporation or a limited liability company established for that sole purpose. These assets can then be leased or licensed to your operating company. From a tax viewpoint, it may even be advantageous to set up these arrangements for doing business with your business assets.? Ask The Mendez Law Firm for more information about these asset protection strategies.? We’ll work along with your accountant to even strive for applicable tax savings.

REAL ESTATE is one asset that should always be owned by an entity apart from the business operation itself.? For instance, we recommend that you not own and operate a restaurant located in a valuable building owned by the same corporation that your restaurant is in. When the restaurant fails, as so many do, the restaurant’s business creditors make claims against the building since it is an asset owned by the same corporation. Why expose your business real estate?? Instead, it’s much wiser to own the real estate through another corporation, a trust, or even a limited partnership.? The key is to keep any real estate separate and apart from a business you may own in a corporation. The real estate then remains safe no matter what happens to the restaurant.? The same holds true for most other businesses you may own.

WHAT IF YOUR BUSINESS OWNS VALUABLE EQUIPMENT? Ownership of business equipment by a corporate entity separate and apart from your business may be the best option to protect the valuable equipment from the risk of lawsuits.? The entity then owning the equipment could have the appropriate documents drafted to lease the equipment back to your business.? Tax savings may then apply once again.? It may also be wise to title important trademarks copyrights and patents in still another entity and license their use back to the operating company.

The objective is obvious; limit creditors to the fewest assets possible should a lawsuit be filed or in the event that your business fails.? Assets properly and adequately protected are then “sheltered from risk.? You will then be able to either use these same assets to start another business, or sell or leave the assets for personal profit.

CAUTION!? If you personally guarantee business debts in your own name, then DO NOT title business assets in your own name.? Because if you do, and should your business be sued or fail, creditors holding your personal guarantee would then have recourse to these assets titled in your own name. Instead title these assets in a limited liability company, a limited partnership, a creditor-proof trust, or a corporation.

For more asset protection strategies to protect your business, CALL US at (407)380-7724 or EMAIL US at [email protected] . The first consultation is FREE!