What happens when your small business gets personal?
When you run a small business, it can be hard to keep separate business from your personal assets at the end of the day. Many small business owners work seven days a week, so this is understandable. However, when it comes to mixing your personal ASSETS and your business, there are good reasons you’ll want to be extra careful.
Risk of lawsuits
If you don’t separate your business assets from your personal ones, you run the risk of losing the latter in a lawsuit. But there are several ways to minimize that risk. These include:
- Properly capitalizing and insuring the business
- Complying with entity formalities
- Properly filing the company’s Articles of Organization or Incorporation
- Creating Bylaws or Operating Agreements
- Separating bank accounts for the business so they don’t mix with personal funds
- Documenting reasons for your financial situation
- Documenting money transfers between you and the company
- Keeping business debt in check compared to equity
Contact Dana Ball Legal Services today
We want to give you practical advice that you can use right away in your day-to-day operations to avoid a full-blown lawsuit. Get in touch with us for more details on exactly how. You can also subscribe for weekly broadcasts on keeping your business out of court.