I’ve already given you two tips about asset protection. Firstly, you must put the family home in the non-business person’s name. Secondly, you should only have one director of your trust and they should be the fall guy. Onto my third tip.
It is likely that your most major asset when starting out in small business is going to be your income. It’s probable that you’ve left a job where you had risk insurance already in place for you, such as sickness and accident insurance via work cover, or some other insurance that was covered by your employer.
When starting out in small business, you have to take 100 per cent responsibility for the income you’re going to generate. That means you need a defensive strategy in place for your income.
It’s called Income Protection Insurance.
Don’t even hesitate in doing it. The younger you are, the better.
Income Protection Insurance simply means that if you need to leave work because you’re ill, you will be covered so that income can keep coming through and you can keep paying your bills. Depending on your policy, Income Protection Insurance can cover you whether you get injured or ill at work or outside of work.
Being the #TaxChampion, it’s important that I mention you should have that Income Protection Insurance in your own name so you can get the best tax deduction. A lot of Income Protection Insurance can be found within superannuation, and in Australia there is a 15 per cent tax deduction. If you have it in your own name, it’s likely that you can get a 30 per cent or 40 per cent deduction, depending on your situation.
Income Protection Insurance is vital as a defence strategy when starting out in business. The earlier you can get it, the better, because the older you get, the more expensive it is.
Get it in place BEFORE you take the plunge into small business.
For more information about asset protection, contact Paris Financial on 03 8393 1000.