Having a business of your own always involves risks, especially when you start. The truth is that it is widespread that only in the second or third business is successful and that is why one should not be discouraged when doing poorly in his first business but must see it as part of a learning process.
In this process of learning, one must try to protect their assets or innovation idea in the best possible way to avoid that in the event of a business failure our assets are also affected.
1. Establish a legal company with limited liability as a corporation.
This is the most common way, and practically all countries in the world allow the constitution of legal persons with limited responsibility to do business. In other words, the partners or, where appropriate, shareholders do not respond with their assets in case the business fails. Many times, however, will not be enough.
2. Make inventories of my company and my assets.
Additionally, inventories of personal assets and those of the company are made since; eventually, creditors will pretend that my assets are also part of the business.
This happens very frequently in small businesses where, for example, I take my home computer to my business. If I do not separate some of my assets with registered inventories, my assets may be affected.
3. Use other legal forms of personal assets.
In the laws of many countries, there are legal ways to protect in a unique way of personal property that cannot be touched if a business fails or any other type of misfortune occurs. Note that usually in the small businesses that constitute companies the partners of the just society are protected with limited liability. Still, often the partner is also a general manager, and there he has a responsibility for his role as general manager and no longer for being a member of the business.
An additional way to protect personal assets is, for example, to establish an autonomous private estate different from the company and different from my person. Many laws provide for this figure, and you should consult a lawyer in your country about it.
4. Avoid giving personal guarantees.
Avoid giving personal guarantees and that it is only the right company that guarantees. You should avoid personally ensuring bills of exchange, promissory notes or other securities or giving private bonds unless you are very sure that you can pay the debt you are guaranteeing.
5. Be very careful in the contracts you sign.
This is essential to avoid criminal liabilities that can overtake you if in the contracts you sign there is something that does not fit the truth and that tomorrow can be used against you as a type of fraud such as fraud. Many people overlook this and do not care about some “inaccuracies” of the contracts which can be dangerous, and that is the importance of always having adequate legal advice.