Most small businesses are sole proprietorships. While this type of business is easy to form and make a profit out of, it exposes the owner to liability for business debts and judgments.
In sole proprietorships, creditors can come after the owner’s personal assets, like savings accounts and real properties, once the business’ money is depleted. While insurance can help reduce the liability, it’s still worth to consider forming a Limited Liability Corporation. This business structure will shield owners from personal liability, but there are more rules and requirements associated with it.
Remember that just because people know nothing about the liability of their business, doesn’t mean they’re not exposed to these types of things. It is always better to consider any form of protection or shield when creating or having a business. Having a business is good as it has a lot of benefits, but it’s better if you can shield your personal assets.
There would always be a possibility that some people would come after your personal assets once the business’ money is depleted. Be aware of what would happen and consider this as a step in getting your business running smoothly for many years.
Think about your business’ legal structure and protect yourself!
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