When you start a business, you know you may have to take on debt to do it. Most business owners do in one form or another. You simply hope that you can structure it in such a way that your income is greater than your immediate debt needs and so you can stay afloat until you eventually pay off the debt and begin making pure profit or taking on new debt for expansions and upgrades.
If things do not work out as planned, though, you could lose the business assets. You may need to liquidate them to satisfy the debt. It’s not a scenario any business owner hopes for, but it’s a reality that you have to take into account when you decide to open your doors.
Business owners are often worried about their personal assets. If your business goes under because of a recession, the arrival of a major competitor or some other issue that is out of your control, you don’t want it to impact your personal life. You don’t want to lose your savings, your family home, etc.
One way to make this work is to start an LLC or a limited liability company. Under this structure, while the business is still responsible for the debt, you are not personally responsible. Liability is limited strictly to the company that you formed. This doesn’t guarantee any type of success, but it can give you peace of mind regarding your personal financial situation.
If you are interested in starting an LLC or looking into the options you have, make sure you know what steps to take.