Even if you are just starting, beginning with the end in mind will set your business up for a lifetime of success and leave your heirs, clients or customers, and team with a valuable asset when you are gone. 

Perhaps surprisingly, properly planning for what would happen to your business upon your death or incapacity is one of the most important things you can do for your company’s growth and success, now and in the future.

By structuring your business affairs with the end in mind, you will naturally make better choices for everything from entity type to hiring and training to pricing and delivery of your services and products. 

Using a few basic estate planning strategies to make sure your business survives your incapacity or death can also set your business up for success from the start. Although you should consult with us, as your Personal Family Lawyer® with family business planning focus, to take you through our unique planning process and determine the specific planning vehicles that are right for your particular business and family situation, the following estate planning tools are essential for nearly all business owners.

Unfortunately, most business owners aren’t fully aware of all the potential risks that can affect their company or the options they have available to protect their personal assets from the risks of doing business. This is where asset protection planning comes in.

Asset protection planning is designed to reduce or eliminate the risks of being in business by shielding your business and personal assets from lawsuits, creditors, and other potential threats to the fullest extent legally possible.

And it’s absolutely crucial to have your asset protection strategies in place from the moment you open your doors, because once a claim or lawsuit is filed, it’s too late. In fact, if you take certain actions to protect your assets after a claim or lawsuit has been filed, you could be charged with fraud. With this in mind, the time to take action is now, while there is nothing to worry about and the full range of options to protect your assets are still available to you.

While the specific protections you require will largely depend on the specifics of your business and your personal assets, the following four vehicles form the foundation of most business owners’ asset-protection planning.

Corporations and LLCs exist as separate legal entities from their owners, allowing the business to acquire assets, enter into contracts, and take on debt.

In turn, if your business cannot pay its debts, creditors can go after your company’s assets, not your personal ones.

However, there are several circumstances in which a business owner can be held personally liable for the debts of a business, and you need to understand how these potential pitfalls can leave you at risk and vulnerable.

Sometimes, business owners make innocent mistakes when running their businesses, leaving them personally liable. Other times, when business owners take specific improper actions, such as using the corporation to promote fraud, failing to observe corporate formalities, or even just inadvertently commingling business and personal assets, a court can hold the owners personally liable for the debts and liabilities of the business. When this happens, it’s known as “piercing the corporate veil” to reach the personal assets of the owners of a business.

If you’re thinking of incorporating your business or already own a corporation or LLC, you should become familiar with the following scenarios that can leave you personally on the hook for your business liabilities.

 By hiring your kids, you can help them develop a strong work ethic, give them experience managing money, and jumpstart their ability to save for their future, all while keeping more wealth in your family.

In return, you get employees who have a built-in sense of commitment, teamwork, loyalty, and you may even end up with a long-term succession plan. This sense of dedication is why so many business owners like to claim that their team is “just like family.”

On top of those benefits, hiring your kids also comes with significant tax-saving benefits. And with the passage of the Tax Cuts and Jobs Act (TCJA), those tax benefits are now even greater than ever before. That said, if you hire your kids, ensure they do legitimate work and you pay them reasonable wages, or you may attract unwanted attention from the IRS. More on this below.

In light of this, it’s critically important to have the appropriate safeguards in place to reduce the risk of fraud and identity theft, especially for your senior parents. Because your parents are probably not as savvy about digital technology and may be losing some of their powers of discernment as they age, it’s quite likely up to you to help them protect themselves—and ultimately your inheritance.

Along with traditional estate planning strategies to ensure your parents’ planning is handled in the event of their incapacity or death, you should take the following four precautions to ensure the safety of their identity and finances while they’re still alive and well.

1) Secure their computer: Your first step should be to make sure all computers they use are protected by robust security software bundled with anti-virus, anti-spam, and spyware detection features. Always go with the latest version of software, and make sure it’s configured to provide automatic updates, including security patches.

2) Use strong passwords and PINs: Create strong passwords and PINs that contain numbers, letters, and symbols, and change them regularly (once every six months). Don’t use the same password for multiple accounts—each account should have its own unique password. Never share passwords, don’t store them on a computer, and keep them in a secure location.