Protect business and personal assets

Running a business as a limited liability company adds a layer of protection for personal assets. However, long-term risks and transitions, such as dissolution, can make a business vulnerable.

As an agent, you can guide business owners toward the best choices. By helping them take the right steps to protect their LLC, including having the right insurance, they can secure their personal and business assets.

Protecting an LLC

Operating a business as an LLC provides some protection from liability for owners. However, some LLC owners have had their status put at risk by failing to separate their business and personal expenses properly. To avoid this problem, agents should inform their LLC clients to keep all personal assets and administration separate and distinct from business items. This ensures that they are operating as an independent bona fide business entity.

No matter where they are in their journey, LLC owners and partners also should consider their businesses’ future and potential end. As an agent, you should instruct clients that fully protecting their business includes planning for dissolution. Dissolving an LLC involves the following steps:

• Ensure all the business partners agree to the dissolution by taking a vote.
• Once agreed upon, comply with state regulations regarding dissolving an LLC.
• File the final tax return, letting the state know this is the last one.
• File formal articles of dissolution with the agent, including appropriate fees.

Owners can take pre-emptive steps to set up parameters for an automatic dissolution to occur, such as the death of a partner, with your help. A step like this can protect their loved ones from the burden of closing the business at a difficult time.

LLC companies also need to protect themselves with the best insurance options.

Protect business and personal assets with insurance

Normally, owners have liability and property (if applicable) insurance in place. However, agents should recommend other types of policies that cover unexpected challenges, depending on the situation, including the following:

Product liability insurance. Anyone who sells tangible items should have product liability insurance, especially if they sell online using markets like Amazon or Etsy. Some marketplaces require this insurance, while others may refuse to pay out product liability claims. If a customer claims injury or other damage from a product, this insurance protects the LLC from financial ruin.

Business interruption insurance. Selling business interruption insurance to LLC owners requires an in-depth understanding of what unforeseen difficulties can strike a business. Agents must communicate how this insurance helps maintain the life and reputation of the company. Equipped with information on how this insurance works, what it covers, and its essential value, agents will be seen as experts in the field of business insurance.

Parametric disaster insurance. While not available everywhere, parametric disaster insurance can provide a safety net for business owners. This type of insurance covers the probability of a disaster occurring rather than the actual loss. Policyholders are paid a set amount depending on the intensity of the disaster, which can improve your client’s chance of receiving a payout.

The right steps

LLC owners must take steps to protect their businesses and personal assets. Independent agents can advise them on the best steps to take and tailor insurance options to their needs. This positions you as an expert and builds trust and reliability from your client base.