| How can you best protect your personal assets? | | | | assets either in a limited partnership or in an LLC. |
| Here are some things to consider.o Keep Your | | | | These protect you from personal liability if anything |
| Personal and Business Assets Separate | | | | should happen on the property and it also provides you |
| If you don't insulate your own assets from those of | | | | another advantage. Should someone become injured |
| your business, you could be in trouble. If you operate | | | | on your property, you are protected from being sued |
| your business in the form of a sole proprietorship or as | | | | directly by the tenant. Remember that the business's |
| a general partnership, these businesses are not | | | | assets are still at risk of suit should the tenant decide |
| registered entities, which means that your personal | | | | to sue. However, if you have adequate insurance, you |
| assets are not insulated from those of your business. | | | | can help protect yourself from having the claimant lay |
| As an example, if you're a sole proprietor and an | | | | claim to your assets so as to satisfy your obligation. |
| angry customer sues you, any assets you own such | | | | This strategy comes with a caveat though. |
| as your house or car are not protected. Nor are | | | | A comprehensive commercial insurance policy can |
| financial assets such as your bank account. These can | | | | help you keep the property instead of having it end up |
| all be taken should a judgment be found against you. | | | | as a part of a court-ordered settlement. What should |
| Or perhaps you've formed a two-man partnership with | | | | you look for? The liability insurance should cover |
| your friend. This may perhaps be an even worse idea | | | | injuries to third parties on your property. It should cover |
| than a sole proprietorship is. What this means is that | | | | trespassing, especially if you have undeveloped or |
| you are as liable for your friend's errors as you are for | | | | vacant land. If you have people working on your |
| your own. You are also liable for anything purchased in | | | | property as your employees, you should also have |
| the name of your partnership. Remember that one | | | | Worker's Compensation insurance. The insurance |
| partner's signature is enough to bind both partners to a | | | | should also have "increased cost of construction" |
| debt or other type of obligation. Again, this leaves you | | | | additions if your building should become damaged or |
| unprotected and without any recourse should | | | | require reconstruction. That means you'll be covered at |
| something happen; you could be left holding the bag. | | | | today's construction prices instead of those of |
| To protect yourself, use a registered corporate entity, | | | | previous years. If you are a landlord, "loss of rents" |
| such as a C or S corporation, a limited liability | | | | riders can help you recover costs in the event your |
| corporation, or a limited partnership. You'll need to keep | | | | building is damaged and uninhabitable so that you can |
| your company's registration up-to-date, hold annual | | | | pay relocation costs or receive income from the |
| meetings and keep annual minutes, keep business | | | | property while it's being rebuilt to offset right losses. A |
| clients separate from your own, and avoid signing any | | | | final consideration is a "higher limits" rider, so that you |
| business-related documentation in your name. This | | | | have extra protection in the event a catastrophic claim |
| keeps your own assets separate from those of your | | | | is filed in one of these categories. |
| business. By the same token, you are also protected | | | | But as we know, insurance companies have an |
| from any debts or disasters incurred by your | | | | economic incentive not to cover every claim. They find |
| business.o Protect Your Business Assets | | | | reasons to deny coverage. So while you will have |
| You need to protect your business and real estate | | | | insurance you will use entities as a second line of |
| assets from yourself. A limited liability company is an | | | | defense to protect your personal assets from your |
| excellent way to help protect key assets. For | | | | business claims. |
| example, if you have a rental property, you should hold | | | | |