New York Business Lawyer Explains Asset Protection
Starting a business can be a great way to grow your wealth, but it is also a risk. Businesses fail and companies can face substantial financial loss. Because of the potential for financial calamity, it is imperative that company owners work with a New York business lawyer to make an asset protection plan.
Daniel Kron can help. We provide assistance with asset protection for entrepreneurs, as well as help with creating an exit strategy for company owners who want to maximize the chances that they’ll be able to cash in on a profitable investment in a business.
It’s important to take steps to keep your personal wealth safe from the first day when you’re getting your company off the ground. Give our business law firm in NY a call today to find out more about the ways in which we can help you.
Asset Protection for Business Owners
For those who are starting a company or investing in a business, the biggest risk is that problems with the company will put your personal wealth in jeopardy. Most people want to limit their losses to the amount of money they invest in the business but, depending upon how the business is structured, capping the amount you lose may not be possible.
If you operate a business as a sole proprietor or if you are a general partner in a business organization, your personal wealth is at tremendous risk when you start or invest in a company.
You and the company are not seen as separate entities in the eyes of the law. You are the business, and the business is a part of you.
This means that if your company gets deeply into debt and has to go bankrupt, the only option is typically to file for personal bankruptcy. If your company is sued and a large judgement is entered against you, your personal assets could be taken to satisfy the judgement and your wages could be garnished until the judgement is paid. If your partners lose all of the company’s money, get you into debt, or get the company sued, your assets are in jeopardy in all of these circumstances.
This is far too much risk for many people to be willing to take on. To avoid finding yourself in a situation where your personal assets could be lost due to business debts or because of a judgement against the business, you’ll need to consider structuring your business as another type of business entity.
You have a number of different potential options depending upon the circumstances.
You could become a limited partner in a Limited Partnership, but this is not always an option depending upon your level of involvement and whether anyone else is serving as a general partner. You could also form a Limited Liability Company (LLC), or incorporate your business – both of which create a separate legal identity for the company.
Forming an LLC and incorporating can provide important protection for wealth, but you need to make sure you go follow all of the steps properly in creating a separate identity for your business. You also need to ensure you do not co-mingle your assets with the companies or otherwise put your assets in jeopardy by failing to follow corporate formalities.
If you cosign a loan for your company or if you fail to maintain separate accounts and treat the company money as if it is your own, you could end up invalidating the protections that incorporation is supposed to provide you.
A New York business law firm can provide you with help understanding how to best protect your assets and limit your liability so you should be sure to talk with an attorney if you’re starting or investing in any company.
Creating an Exit Strategy for Your Business Organization
While the primary asset protection goal is to keep your personal wealth safe when investing in a business, you also want to make sure your investment in the company is as safe as possible. This means you want to ensure that you have an exit strategy so you can cash out your investment if it turns profitable, and you want to take steps to maximize the chances the company will be able to operate successfully and turn a profit.
We will help you to ensure you take the necessary steps to protect the money you’re investing in a business and to maximize the chances of company success so you can turn a profit. There are a number of different ways that a NY business lawyer can help including:
Assisting with the creation of a shareholder agreement, partnership agreement, employment agreement and other key contractual agreements. You can create contracts to establish corporate governance policies, to delineate responsibility for different company tasks, and to make clear the rights and obligations of each co-owner.
A buy/sell agreement. Buy/sell agreements are essential to creating an exit strategy and to ensuring you can leave the company and cash our your investment without jeopardizing the company’s value. A buy/sell agreement should be created when your company first begins operating and should specify what happens if any co-owner must depart for any reason such as death, divorce, disability, or simply wanting to move on. The buy/sell agreement should address issues such as how an ownership stake in the company is valued and whether the remaining co-owners get first rights to buy a departing owner’s company shares.
These are just a few key issues that you should address in making sure that you can cash out your investment when you hope to benefit from the profits that your company has produced. NY Litigation Firm will help you to address other issues important to your particular situation.
Getting Help from New York Business Lawyers
New York business lawyers will help you to ensure you understand all of the risks associated with starting or investing in a business.
We will also help you to use effective legal tools to minimize and mitigate those risks. To find out more about the help we can offer, give us a call today.