There’s never been a better time to be an entrepreneur. One idea can change your fortunes and make you a millionaire. Even if the fairytale doesn’t happen, at least you’ll be the boss in control of your career.
Let’s face facts – no one enjoys working for the Man. Thankfully, there is no need to in 2018 as long as there is an internet connection. Being the person in charge has never been more accessible than at this very moment.
That doesn’t mean there aren’t pitfalls. As a freelancer or an entrepreneur or whatever the term, you’re entirely liable. Yes, if anything goes wrong then the aggrieved party can file suit against you personally. Sole proprietorships are flexible but they don’t offer much protection in case of attack.
Safeguarding your finances and your valuables are essential. Otherwise, the business venture which was going to make you rich may end up with a bankruptcy application. Whoops. Where there is a will, there’s a way, and a sole trader doesn’t have to live in constant fear of a court date.
Here are the ways to avoid losing everything when you try to better your life.
Go A Different Route
Not all formations are born equal. A sole proprietorship provides a set of options but there are plenty more fish in the sea. Take a limited company as an example. The setup means there is a range of safeguards in place to protect the individuals. In simple terms, any lawsuits which come your way are for the company and not the person in charge. Limited corporations don’t have to pump in their own money, so they are liable in the eyes of the courts.
And, there are other advantages to consider, such as tax breaks. For those that assume setting up an LLC is hard, then think again. The key is to find an agent that will act as a middleman between you and the government. On top of that, there is the name to consider too. For more info, take a look at this link.
Remember that there is no reason to start life as a sole trader if it doesn’t suit your needs. Sure, there are pros for individuals, but it isn’t as if an LLC is difficult to form.
Being the boss isn’t straightforward. Consider covering all of the bases for a moment. There is a lot on your plate and things will inevitably go under the radar. Or, some investments will appear more significant than others at the time. Do you need insurance when there’s a good chance the company may never pay out? To plenty of sole traders, it seems as if it’s an unwise investment.
The truth is that business insurance is essential for every startup. However, it’s probably twice as crucial for individuals due to the risks. Unfortunately, there isn’t a foolproof way to negate all the hazards of selling products. So, it makes sense to have a backup plan in case the worse happens.
A policy is an ultimate contingency because your partner will pick up the tab. Okay, they may try and worm their way out of it, but they should stick to the deal as long as everything is above board. With this in mind, research the potential sticking points and always read the fine print. Also, tell them about any changes in case they void the coverage.
But the whole point is to protect them so that you don’t have to sell. So, why is this post advocating abandoning ship? It’s because there is a clever way to sell assets yet stay in control. All you have to do is give them to your spouse for a small fee. Then, they won’t be liable as long as her name has nothing to do with the company.
There has to be a fee involved. Otherwise, there is no way to tell whether a transaction has taken place. Also, it’s important to document everything so that there is proof in case of a suit. A receipt or a sale of goods bill should suffice even in a court of law.
Of course, a risk is that you split up and your spouse gets to keep everything. This is something to keep in mind, but entrepreneurs who trust their significant others should be fine. Yes, it’s sneaky but it may be the only way to stay liquid in the event of an emergency.
Be Health And Safety Conscious
Not all lawsuits revolve around a slip and a fall. Some clients may sue because they don’t feel as if the quality was up to standard. Or, partners may go to court for loss of earnings and damages. The list is endless, but the one type of suit which is becoming more popular is an accident at work. All it takes is one loss of concentration and someone can get seriously hurt.
From the business’s point of view, it’s nearly impossible to keep up to date. However, it’s crucial to try to avoid a battle with your employees. Staying alert is the number one priority. So, constantly search for hazards that may escalate such as slippery floors and loose wires.
Probably the best way to eliminate workplace dangers is with training. Train workers to spot hazards and report them back to their line manager. Once it gets up the chain, you can do something about it without there being a full-blown incident.
Crowdsource The Cash
Money doesn’t grow on trees, so there is bound to be a lack of it in the budget. As a result, a trip to the bank is on the cards. Simply apply for a personal loan and use it to kick-start the company. It couldn’t be simpler. Indeed, thousands of entrepreneurs use this tactic to put ideas into practice.
However, be wary of putting up personal assets as collateral. Instead, crowdsource the money to avoid undue risks.
Are you aware of what it means to be a sole trader?