Personal assets deserve the same protection as your business 

Along with the rewards of business ownership come risks – including risks to personal assets should  action be brought against your business. Insurances, diversification, smart management and good hiring  are ways to protect your professional assets, but it’s imperative to learn how to protect your personal  assets.  


Begin by separating your personal world from your professional one by making your business a  standalone company. This includes choosing the type of entity your business will be; it matters.  

Though popular, sole proprietorships and general partnerships leave owners liable for any company  debts, judgments and lawsuits, and creditors can lay claim to both personal and business assets. For more  rigorous protection of personal assets, consider the primary benefits of an S or C corporation or a limited  liability company (LLC). In an S corporation, shareholders can be held liable only for the money they invest  in the business, and creditors are unable to seize personal assets in the event of a lawsuit or other loss. In  a C corporation or LLC, there is limited legal liability for directors, officers, workers and shareholders.  

All corporate documents should be created by a qualified attorney and kept readily available. Annual  maintenance includes paying the required fees to the state, holding mandatory meetings and keeping  minutes. Maintain separate financial accounts for your personal life and business and use the company  name on corporate documents.  


If your corporation owns property, you can add a second layer of separation between your personal assets  and anyone seeking damages from an injury that occurs on the property by having the property owned  by a separate LLC. Make sure the entity has a written procedure in place for fixing hazards when  identified. Consult an attorney to determine if a strategy like this is right for you.  


Rather than targeting the assets of the business, someone seeking damages can pursue the money  available through insurance. Purchase the right amount and kind of insurance – type varies depending on  whether you rent property, own a rental property, or operate a professional practice or retail space. A  knowledgeable insurance agent can advise you on what you need and help you reassess your needs  annually.  

Once established, maintain your strategy to provide years of protection while you grow your business.  


Protecting your assets is just as important as protecting your business – especially when you are the  business. Some things to think about:  

  • Decide what business structure works best to protect you from actions against your business.  Ask your advisor about an owners-only 401(k) as these vehicles can prevent loss of retirement  savings in the event of a lawsuit to your business. 
  • Talk to an insurance agent to make sure you have the right amount and types of coverage.  


Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. 

Material created by Raymond James for use by its advisors. The information contained herein has been obtained from  sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond  James is not affiliated with any other entity listed herein. © 2022 Raymond James Financial Services, Inc., member  FINRA/SIPC. 21-BDMKT-5251 EG 2/22