Are your personal assets protected from your business liability? Business Foundation Checklist

For the last six months I have been a part of a wonderful business- coaching group by Cheri Ruskus of the

Victory Circles.

  Besides affording me the opportunity to learn and share with an amazing group of women entrepreneurs, I also have a new perspective and much better understanding on how to run my business from a business perspective rather then a lawyer's perspective.  I am grateful and most pleased because I am sure that it will help me advise my clients better in running their businesses as well.Many of my clients own businesses and/or rental properties.  I encourage them to meet with me on a yearly basis to review their business compliance and or landlord obligations - with the goal of making sure that their 

personal assets

 (such as their residence, savings, retirement, etc.) are protected should anything happen related to the business or rental property. If you don't have a proper business legally set up for either a business you are running or properties you are renting-- then your personal assets are at stake and up for grabs if your business or rental incurs liability.  If you do have a proper legal foundation and your business is properly recognized, your personal assets will most likely be protected should something happen.  I am always happy to meet with business owners and or property owners to review their business compliance needs and make sure their personal assets are protected. Check out the business compliance checklist below - for a quick self review.

Business success is not just about creativity and breaking through - its also about planning and having a solid legal foundation

Business Foundation Check List

 Does your business follow these simple steps:

  • Have you filed the appropriate documents with the secretary of state and if so are they kept up to date?
  • Do you have a working operating agreement or bylaws for your company and is your company notebook current?
  • Do you use a bank account (usually a checking account) in the name of your entity?
  • Can you ensure that you can document all moneys put into your entity in return for your ownership.
  • Is it clear that any interactions your entity has with other commercial enterprises or individuals that you are acting on behalf of your entity and not as an individual?
  • Do you use letterhead on all of your correspondence and contracts?
  • Do you include the entity designation ("Inc.," "Limited," "Ltd.," "LLC") whenever possible on business identifiers such as business cards, advertisements, etc.?
  • Do you sign documents in your representative capacity, and not as an individual:

YOUR ENTITY NAME ______________________________________________

by:  YOUR NAME, YOUR TITLE (Manager, President, Owner, etc.)

  • Have you ensured that all assets that are meant to be owned by your company are titled in the name of your entity and not in your name personally.
  • Are you careful to never commingle the funds or assets of your entity with your personal funds and assets.  If you need to fund the operations of your company with your personal assets, document the transfer as either a loan or a contribution to the capital of your entity.  If you need to use assets of the company for personal reasons, distribute the assets out of the company to yourself first as income, profit distributions, or a return of your capital contribution?
  • Have you held your annual meetings - yes - annually?!  This is one of the first things a judge will look for in deciding whether to allow a creditor or other to go after your personal assets.