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Legal Wisdom

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Separate the business from the assets

The basic rule in asset protection for business owners is ro separate the ownership
of the major assets from the operation of the business. This keeps the operating
company (which faces the majority of the liability) as lean as possible-while the
assets needed ro produce a profit are not generally subject ro seizure in the event
of a lawsuil. For example, a pizza restaurant may choose to function as a LLC,
yet the LLC would own very little in real assets; perhaps some supplies, inventory,
and a few accounts receivable. The major assets: the building, cash registers.
refrigerators, ovens, ere. which are essential for operating the business could be
held in a separate legal entity (such as a Limited Partnership) and leased to the
operating LLC. Should the business get sued, the liability insurance would usually
be the only attractive remedy to satisfy the injured party. Should the business go
insolvent, or bankrupt, the assets would be in a separate legal entity that could then
be leased to a new startup business.

 Legally Mine LLC

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