Articles Cristi Michelon Vasquez Santa Barbara Attorney

Total Asset Protection

By Cristi Michelon Vasquez on Sep 14, 2018 at 05:30 AM in Entity Formations

Operating your business as a sole proprietor or partnership may not offer you the protections you seek. Thinking about your future and the future of your family requires that you consider how you are running and operating your business. Forming a business entity may offer you the protection that you need to build a legacy well beyond tomorrow.

There are three important features of a business entity that an entrepreneur will realize with formation. Business entities allow you to compartmentalize your assets and liabilities, allow you to streamline your operations and offer you protection from your creditors. These are benefits that you simply cannot pass up.

Liability protection is one of the most common features of a business entity. When a business entity is formed it allows the business owner to separate their business assets, liabilities, and responsibilities from their personal obligations. This “compartmentalization” allows a business owner to take advantage of certain opportunities that may not otherwise be available to a sole proprietor. The freedom that comes with a business entity comes with the security of the separation of the one’s business assets from one’s personal assets.

Maximizing your growth potential is certainly something that every business wants. A business entity can allow you to maximize your growth, create your independence, and develop longevity in your business. Forming a business entity allows you to create a budget, pay yourself, pay your taxes and plan your future. It allows you to be complete with your goals and be out in front of your daily, monthly, and yearly needs. You will also be able to deduct your self employment taxes that may have simply been a cost of doing business for years. A business entity also allows your business to be easily transferable, allows for the generation of additional capital, and allows for your business to continue in perpetuity.

Liability protection also comes in the form of creditor protection. An owner of a business entity, i.e. a share holder of a corporation or a member of an LLC, is liable for the debts and financial obligations of the entity to the extent of their investment therein. In simple terms, this means that a business owner’s liability is limited and their personal assets may be protected from liability if all of the formalities associated with the business entity are observed. This form of liability provides safety and security for the business owner’s family, and their future.

While it may seem simplistic to breakdown the benefits of a business entity into three main features, total asset protection focuses on these three main topics. Making sure that you have ensured a certain quality of life for your family is as simple as ensuring the quality and security of your business. Minimizing risks and maximizing opportunity is the key to total asset protection.