Want to learn why or how to use a company when buying an asset?
What are the risks involved when owning assets?
John Gallagher, local Sunshine Coast solicitor provides the answers to all your questions.
Can suppliers or creditors sue if they're not paid? Can anyone who supplies good or services be sued for damages? By owning a property you can face a claim for damages, if someone is injured on your land.
And If any of these claims are made, you can lose all of your assets, everything else you own, not just that business.
And if you're just a shareholder or the director of the company, can other assets in your own name be at risk? You should seek legal advice about your personal exposure, if a claim is made against the company.
What is a legal strategy when buying a business or a property, to avoid being sued? Are there negative tax consequences for setting up a company?
Before you acquire a property, a business or some other asset it is wise to consider the legal structure you will use to own it.
With the help of advisors people often set up companies and trusts before they purchase assets or begin business ventures.
One reason this is done is for asset protection.
There are risks that come with owning assets:
- Business owners often have suppliers or other creditors who can sue them if they are not paid;
- Anyone who supplies products or services can be sued for damages caused by faulty products or negligent advice;
- Just by owning a property you can face a claim for damages for personal injury suffered by someone on your land.
If any of these claims are made, then all assets of the owner, not just the relevant business or property where the damage was suffered, can be at risk and made available to pay the claim.
If the owner is you personally, then you could lose not just your business or property, but everything else you own.
If the owner is a company and you are just the shareholder, assets that you own in your own name or in another company are not generally at risk.
Even as a director of the company, your personal assets will not be at risk in many circumstances, although you should seek legal advice about your personal exposure as a director.
A common strategy when buying a business or other asset is to set up a company to act as the owner.
It is better to do this right from the start as there can be some negative tax consequences of setting the company up at a later time.
Trusts can also be a useful tool in asset protection.
If you have any queries then please contact us on 07 5443 9988 or [email protected].
Argon Law is a Sunshine Coast law firm based in Maroochydore. We are commercial lawyers, business lawyers and property lawyers and are eager to assist you in any way we can.
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