Another party may sue your Oregon business for any number of reasons. A lawsuit that goes against you could cost you a lot of money and possibly even your entire business. Before litigation looms your way, consider how to guard your finances against a devastating court judgment.
There are different ways to protect your business assets depending on your circumstances. If you deal in real estate, you can create separate corporate structures for each property so a lawsuit against one of your businesses does not affect the others. As Entrepreneur explains, there are some basic strategies that may help most business owners.
Have business liability insurance
When you buy liability coverage for your automobile, you are protecting yourself from financial ruin in case you get into an auto accident with someone who later sues you for damages. Business liability insurance works in a similar fashion, giving you coverage in the event you lose a lawsuit.
Keep in mind that your liability policy should give you adequate coverage and the right kinds of coverage. If another party sues you personally, your policy might not cover you. This is why some entrepreneurs buy an umbrella policy that protects both business and personal wealth.
Compose an asset protection plan
Even with liability insurance in place, going through litigation may still cost you a lot of money. This is why some business owners create an asset protection plan. This kind of planning allows you to come up with legal strategies to shield your assets from court judgments, like creating an asset protection trust.
It is important to have the right professional help when creating an asset protection plan. Some strategies may not pass legal muster, so you should know if your plans meet the requirements of state and federal law. Having the right strategies in place may even deter creditors from bringing a lawsuit at all since they will likely reap nothing from the effort.