What is Asset Protection and Why is it Important in NSW?
As a business owner, it’s essential to separate your business activities from your personal life where possible. This helps protect your assets from the many risks you face in running a business. A, insolvency and bankruptcy lawyer that specialises in asset protection strategies can help safeguard your personal assets from the risks of business insolvency. The team at Access Law Group in New South Wales explain.
Author: James Welch
29 August 2022
Why Business is High Risk
While running a business is highly rewarding, it involves exposure to various risks including:
- Taking on a costly commercial lease
- Drastic market changes, such as trade wars and recession
- Customers going out of business and unable to pay your invoices
- Legislative changes, such as zoning
- Activities associated with being an employer
- Claims against your products or services
- Personal guarantees for credit and goods and services
- Tax and superannuation debts
- Significant debts causing business failure
A smart asset protection strategy involves hiring a corporate lawyer to help reduce the impact of a business failure on your personal finances through:
- Strategic ownership of assets
- Establishing the most appropriate business structure
- Selecting the most appropriate insurance policies
- Understanding your contract liabilities
- Compliance with tax and BAS obligations
No asset protection structure is 100% effective. Most asset protection structures can be undone when entered into too late, such as when one of the risks is imminent or has already become a reality.
Examples of Asset Protection Strategies
A common asset protection strategy includes the use of discretionary trusts. This allows the trust to become the legal owner of assets instead of you, shielding your personal assets from being used to meet a creditor’s claim.
The simplest asset protection strategy is structuring your business as a company. A corporate lawyer will often recommend this because sole traders and partners in a partnership are personally liable for their business’s financial or tax debts. However, as a director of a company you still put your personal assets on the line, so you should still seek asset protection advice.
Seeking Legal Advice
There are various legal compliance requirements for setting up, registering and running asset protection strategies. It’s advisable to seek the services of an asset protection lawyer that specialises in corporate and insolvency law.
Asset Protection Lawyer in Wollongong, Camden and Sydney
An Access Law Group insolvency and bankruptcy lawyer can work with your current accountants and other advisors to move business risks away from you and your assets. For trusted legal services in Wollongong, Camden and Sydney, call our team today on 02 4220 7100 or contact us online.