As a business owner, what mistakes are you making that is placing you and your business at risk of financial threats? An act can be as risky as an omission. Below, we will consider some of the common mistakes business owners make that become the impetus to their downfall. As you create plans to make this year the best financial year for your business, let’s cover some areas that require your attention to guarantee the success you aspire to achieve. Your financial success won’t just come from generating more revenue, increasing sales, growing your team, or solely focusing on the bottom line. Ultimately, your success will also come from your willingness and ability to take the knowledge we’re about to cover into practice.
Mistake #1 – Waiting too long
Quite often, business owners don’t see the value in addressing Asset Protection until it is too late. Once a lawsuit is filed, your window of opportunity is shortened and the options available to you are limited. Just as you wouldn’t wait to get into a car accident to obtain car insurance, you should not wait for someone to threaten taking away everything you own before gearing up and following the necessary steps to protect your assets.
Also, there isn’t a dollar amount you need before partnering with an Asset Protection attorney who will help structure your assets in a manner to be judgment proof. Whether you have a couple hundred thousand or millions in the bank, it is never too early to get the advice you need. In being proactive, you are always ready for those who want to tear down your empire. Regardless of where you are financially, Asset Protection is for everyone. Give your wealth a purpose.
Mistake #2 – Using the wrong structure
Though we live in a society that loves to promote DIY or do-it-yourself strategies, Asset Protection is not one of them. We often see people who in effort to savings costs, would piece meal their own financial structure based on what they heard in an online article, on Tik-Tok or an Instagram reel. Don’t risk your entire life’s work on one post that may not be applicable to your specific situation. Just because your friend used an irrevocable trust doesn’t mean you need one too. Depending on your current and future goals, your structure shouldn’t look like anyone else’s planning. Asset Protection is not a one size fits all matter and can’t be applied the same way to every person. As your goals may be different from mine, I may desire to have my kids inherit the business where you’d prefer to have it sold and the proceeds given to charity. It’s important to meet with an experience attorney who can put together a customized and tailored plan for YOU!
Mistake #3 – Forgetting Estate Planning
Asset Protection and Estate Planning are both essential parts to your wealth empire. One doesn’t replace the other. If you’re thinking about legacy wealth planning, you need the proper vehicles to protect your assets while you’re alive and an integrated estate plan to distribute your assets to who you want, avoid probate, pay less in taxes, and less attorney fees when you are no longer alive. Be proactive in not only planning for the present, but also preparing for your future.
Mistake #4 – Co-mingling your business and personal accounts
As you go about your day-to-day, one might inadvertently grab the wrong debit card and swipe it for a personal expense only to realize they grabbed their business bank card. This is completely different from a person who habitually pays their primary home mortgage, groceries, gas, and utility bills from their business checking account. Co-mingling your business and personal funds can cause you to lose everything. Combining funds creates a presumption that your business is an alter ego of you, allowing courts to see you and your business as one in the same. Keep your business and personal assets separate!
Mistake #5 – Paying annual renewals
A basic and simple step but often overlooked. Once your Asset Protection structure is built, one of the key maintenance requirements is paying for your annual renewals. A failure to renew your entities, is one good reason for a court to overlook the existence of your entity and hold you personally liable for a claim. Staying current with the state’s renewal fees will give you the blanket of security that your entity is in existence.
While we covered only four of several common mistakes made by business owners, partnering with the right Asset Protection legal team is the first step to avoid many more. 2023 could very well be your first year to generate seven-figures, or eight, maybe nine. What will you do different this year to make sure your t’s are crossed and your i’s are dotted? At The Presser Law Firm, we specialize in building the best infrastructure to house our clients’ assets. Tailored to each individual’s goals, we can guide you and make your assets resistant to creditor claims. The Presser Law Firm, P.A. can be the architect to your wealth building.