Becoming wealthy isn’t a destination. It is a process, and that process could take a quick turn in any direction at any time.
You could get lucky and end up even more wealthy, or you could watch as all the wealth you’ve accumulated drains away.
Hiring a professional advisor can make sure that doesn’t happen to you. These tips will make sure it doesn’t happen to you too.
Always Consider Forming a Business Entity When Starting a Business
It isn’t all that uncommon for people to start a business. Some people start a small business in the basement or the garage in their spare time while other people go all-in and start a larger business on day one.
No matter what kind of business you start, you should always consider forming a business entity in the early stages of your operation.
There are many different kinds of business entities to choose from that include:
- General and Limited Partnerships
- Limited Liability Partnerships (LLPs)
- Limited Liability Companies (LLCs)
- C Corporation
- S Corporation
Most allow you to separate your business assets from personal assets. That way, if something goes wrong with your business, creditors can’t come after your personal wealth.
Use Proper Contracts and Procedures
If you have your own business, it is extremely important to use the proper contracts and procedures in every area of the business. From non-disclosure agreements for employees to safety procedures in the event of an emergency, having the right paperwork in place can ensure that no creditor or third party can find that you’ve acted negligently or fraudulently.
It’s not just professionals that can use contracts to their advantage. If you own rental property or if you ever hire a contractor, you need to have the right contracts in place. You may even want to consider a prenup before you get married.
Whether it’s a business or an individual, everyone has to make sure they have the right insurance. For individuals, that should definitely include:
- Health Insurance
- Homeowner’s or Renter’s Insurance
- Auto Insurance
- Life Insurance
However, depending on your circumstances, you may want to consider other types of insurance too that include travel insurance, pet insurance, supplemental insurance, and more.
Save Using a Retirement Account
It’s a scary prospect to end up at retirement age without a penny to your name. That’s why it’s important to protect your wealth for later in life by using a retirement account.
Federal law prohibits ERISA-qualified retirement plans and up to $1 million in an IRA from being taken in the event of a bankruptcy or other legal proceeding that would otherwise drain your bank account. It’s the best way to protect your long-term savings.
Money comes and goes. It’s for spending, after all, but no one wants to spend all of their money on a mistake that results in poverty. With these four tips, and with help from an advisor, you can make sure your wealth is protected throughout your entire life.