Unfortunately, operating a small business comes with tons of risks. That’s why you need a foolproof strategy to protect your venture from any possible loss. The Covid-19 pandemic brought several businesses to a halt.
Fortunately, there are a myriad of ways to protect your business from any form of loss.
Pick the Right Entity
There are four primary business entities, which include;
- Sole Proprietorship – This type of business is exclusively owned and operated by one person. It means you’re entirely liable to all profits and losses. It’s easy to dissolve, and upon the owner’s death, the business ceases to exist.
- Partnership – It consists of two or more corporations, persons, and other partnerships to carry on with the business. The persons in partnership share profits and losses.
- Limited Liability – It’s a hybrid of a partnership and corporation. The business is extremely flexible, and in case one of the members dies, others can vote to continue or dissolve.
- Business Corporation– this is a legal entity established to conduct specific types of business.
A corporation or Limited partnership is relatively safe since you can transfer all assets under the company’s name. Corporations help you to protect personal assets while limited partnership protects your business assets.
A business bond is different from your regular business insurance, but it provides a form of risk protection. Business bonds such as these are ideal for components of the business’s overall risk management. Fidelity bonds and surety bonds are the common business bonds you can get.
Fidelity bond covers your business against financial loss due to employee’s dishonesty, embezzlement, or theft.
On the other hand, the surety bond protects your customers if you’re not able to complete a project. Ensure you seek surety bond service from a reliable, licensed, and bonded company.
Separate Personal and Business Assets
Establishing a distinct separation between business finances and personal finances is critical in protecting your credit and assets. Open a business bank account to ensure you separate personal and business funds. It sets you up for accurate and clean bookkeeping.
Apply for a business credit card to allow you to track expenses, build business credit, and control spending. Failing to separate business and personal finances leads to an accounting nightmare for your bookkeeping. You may also risk forfeiting legal protection that an entity structure offers.
Protect Intellectual Property
While letting the world know of your success, don’t forget to protect what you’ve toiled for. Copyrights and patents offer you some security. Ensure you don’t file patents, and when a recipe is published, someone can create a similar product.
Separate teams for information security. Teams need to work together to steal a product. But if there is separation, it makes it hard to steal products or alter its quality.
More so, store creations, manuscripts and all ideas in a well-protected place. With over 81% of breaches due to compromised credentials, store intellectual property on a system with at least two-factor authentication.
The Bottom Line
These strategies are a small snippet of details concerning business protection. With your business protected, you’ll have peace of mind and focus on boosting your business.