How The Best Startup Founders Protect Their Valuable Assets

There is no shortage of opportunities for the business savvy startup founder to grow his business. We live in an age that seems to cater to those bold enough to take the leap and start their own company. The nature of such businesses make bootstrapping completely feasible where once angel investment or venture capital backing were required to make a dent against the competition.

With more chances for success being laid at the feet of startup founders, even the tiniest operations can have serious profit predictions starting almost right away. That, and the nonstop list of to-do’s that are the responsibility of the business owner can lead to a bit of recklessness when it comes to protecting assets already possessed by the founder, or acquired shortly after launch.

Asset protection is a must for any entrepreneur. Without taking the right steps to secure those assets, you run the risk of losing it all the moment you hit a speed bump on the highway to your success.

Here are two risks to your assets, and the ways you can protect them as a startup founder.

How Much Founders Pay In Taxes

There is no way to avoid paying taxes, either as a business or an individual. Unless you are creating a nonprofit or religious institution that is exempt, which as a startup is unlikely, you are going to be taking a fair percentage and giving it over to the IRS every quarter.

How much you pay is going to vary based on how you have registered your company (Inc, LLC, ect), how much profit you make versus business expenses, how many employees you have, special programs you take advantage of (energy conservation or “green” initiatives, prison work programs, at risk community outreach, ect), charitable donations, and a lot more.

Having a Charitable Remainder Trust (CRT) instated might be your best bet, especially if you plan to eventually sell. But the rules are complicated and frustrating. You need to have a licensed, experienced accountant who knows how to work with startups to find the best tax options. Otherwise you are going to be spending out the nose when you don’t have to.

Lawsuits Against The Founders Assets

We are in a seriously litigious society, and both individuals and companies are quick to turn to lawyers for even imagined infringements. Some of the bigger names already established may sue just to intimidate you out of the competition.

During a lawsuit, if you haven’t registered your company correctly you could be risking your personal assets as part of the judgement. So you need to take that into consideration from the very beginning.

The easiest way to protect assets from lawsuits it so register as an LLC. Then take real estate and business assets and register those under their own LLC’s. You can do this all at once, or over time. The more entities tied to a business, the safer they will be since the plaintiff has to pay for each individual entity complaint, which may cost in the thousands to pursue.

This tactic may also protect your wealth against creditors.

You can find out more about defending your assets from any risk here.