Also use separate entities to prevent the loss of your assets. "Whenever significant long-term assets exist, consider a separate holding entity," explains Kirkup. "Real estate is the prime example. Put property into a separate entity, and rent it back to the business. Another example could be patents for your products."
Don't shy away from creating new entities because of the cost. "In most states, setting up a corporation or limited liability company costs $400 to $600, and your accountant may charge you to do an extra tax return," says Lovingood. "You may pay only $1,000 a year for additional risk and asset protection."
The key to minimizing risks is foreseeing and preparing for them. "Small-business owners can get off track by falling into the prediction trap," explains Randy Park, a Toronto-based author and speaker on small-businesses. "You assume that what happened yesterday is going to happen tomorrow. But you need to be really clear on the risks affecting your business model."
Bankrate wants to hear from you and encourages thoughtful and constructive comments. We ask that you stay focused on the story topic, respect other people's opinions, and avoid profanity, offensive statements, illegal contents and advertisement posts. Comments are not reviewed before they are posted. Bankrate reserves the right (but is not obligated) to edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.