Protecting Your Assets When Entering Into A Business

When getting into business you want to ensure your personal assets are not put at risk in the event the business fails.

Incorporation is one method of safeguarding your personal assets against claims of creditors and lawsuits. This creates a corporate veil that protects an individual from corporate liability. However, this veil is potentially pierced when:

• You provide a personal guarantee or you allow debt that carries a director liability to accumulate or;
• You take funds out of a business such as dividends at a time when the company can't meet its payment obligations.

Before you start a business, seek professional advice so that you fully understand your rights and your creditor's rights.