Liability Protection In A Business

While asset protection is important for every individual, it is particularly important for business owners. Without asset protection, a business owner's personal assets are exposed to risks from the business. Lawsuits related to the business could put personal assets in jeopardy and vulnerable to seizure. Proper asset protection planning in conjunction with business development enables the personal assets of a business owner to be protected from business liabilities and creditors.

A limited partnership allocates ownership of business interests among two different types of partners, general partners and limited partners. Limited partners are those who may own most of the interests in the business but who do not retain control over business activities. While limited partners have no control over business activities, they do enjoy limited liability for business actions. General partners, on the other hand, may own a small percentage of the business interests but retain control over the management of the business. General partners have a greater risk of liability for the affairs of the business.

There are many potential liabilities which arise from owning a business: negligence or mistake of employees, random accidents, breaches of contract, environmental damage, fiduciary obligations, and many others. Moreover, business owners are seen as "deep pockets" by litigants and aggressive plaintiffs' attorneys. Asset protection by business owners is therefore crucial in protecting business and personal assets from creditors, litigants and external threats.

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