CREDITOR PROTECTION <ul><li>10 Tips for Business Owners </li></ul>
BUSINESS OWNERS, OFFICERS AND DIRECTORS <ul><li>Owning or running a business can be very rewarding </li></ul><ul><li>But y...
<ul><li>What if something went wrong with your business? </li></ul><ul><ul><li>Business insurance covers against liability...
PERSONAL LIABILITY <ul><li>Business owners, officers and directors can be personally liable for: </li></ul><ul><ul><li>Any...
PERSONAL LIABILITY <ul><li>Business owners, officers and directors can be personally liable for: </li></ul><ul><ul><li>Goo...
HOW CAN YOU REDUCE THE RISK? <ul><li>Here are 10 tips to help you manage your risk… </li></ul>
TIP # 1 <ul><li>Consider incorporating your business if it is either large or at risk of litigation. </li></ul><ul><ul><li...
TIP # 2 <ul><li>Always pay your statutory debt on time. </li></ul><ul><ul><li>Not all debt is created equal </li></ul></ul...
TIP # 3 <ul><li>Ensure sufficient personal liability coverage. </li></ul><ul><ul><li>e.g. director’s, home and auto covera...
TIP # 4 <ul><li>Ensure your spouse is outside the reach of creditors in the event anything goes wrong in the business. </l...
TIP # 5 <ul><li>Make use of spousal RRSPs to transfer wealth to a spouse. </li></ul><ul><ul><li>Move personal wealth away ...
TIP # 6 <ul><li>Consider moving personal assets to your spouse’s name. </li></ul><ul><ul><li>e.g. your house and savings <...
TIP # 7 <ul><li>Hold life insurance contracts personally  </li></ul><ul><li>(not corporately). </li></ul><ul><ul><li>Name ...
TIP # 8 <ul><li>Place your savings into investment products sold by insurance companies. </li></ul><ul><ul><li>Segregated ...
TIP # 9 <ul><li>Get professional tax and legal advise on a creditor protection plan. </li></ul><ul><ul><li>This is not a “...
TIP # 10 <ul><li>Make a plan now. </li></ul><ul><ul><li>Once a business is in trouble, it’s almost impossible to establish...
TAKE ACTION <ul><li>At Diatel & Fedullo Wealth Management, we can help you develop a creditor protection plan with the ass...
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Creditor Protection Strategies for Business Owners

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Creditor Protection Strategies for Business Owners

  1. 1. CREDITOR PROTECTION <ul><li>10 Tips for Business Owners </li></ul>
  2. 2. BUSINESS OWNERS, OFFICERS AND DIRECTORS <ul><li>Owning or running a business can be very rewarding </li></ul><ul><li>But you can also be exposed to a lot of risk </li></ul>
  3. 3. <ul><li>What if something went wrong with your business? </li></ul><ul><ul><li>Business insurance covers against liability, but not insolvency </li></ul></ul><ul><ul><li>Personal assets are at risk of creditor claims </li></ul></ul><ul><ul><li>3 out of 4 Canadian small business owners have not taken adequate steps to protect their personal assets </li></ul></ul>BUSINESS OWNERS, OFFICERS AND DIRECTORS
  4. 4. PERSONAL LIABILITY <ul><li>Business owners, officers and directors can be personally liable for: </li></ul><ul><ul><li>Any debts for which the business owner, officer or director has given a personal guarantee </li></ul></ul><ul><ul><li>Any statutory debts, such as wages * and vacation pay </li></ul></ul><ul><ul><li>Any source deductions owed to Canada Customs and Revenue Agency </li></ul></ul>* Directors are personally liable for wages to a maximum 6 months’ wages for each employee owed.
  5. 5. PERSONAL LIABILITY <ul><li>Business owners, officers and directors can be personally liable for: </li></ul><ul><ul><li>Goods and Services Tax and/or Provincial Sales Tax </li></ul></ul><ul><ul><li>Health and safety violations </li></ul></ul><ul><ul><li>Environmental damage </li></ul></ul>
  6. 6. HOW CAN YOU REDUCE THE RISK? <ul><li>Here are 10 tips to help you manage your risk… </li></ul>
  7. 7. TIP # 1 <ul><li>Consider incorporating your business if it is either large or at risk of litigation. </li></ul><ul><ul><li>Professional practices should carefully consider this option </li></ul></ul><ul><ul><li>Even with incorporation, personal assets can be attached for debts covered with a personal guarantee </li></ul></ul>
  8. 8. TIP # 2 <ul><li>Always pay your statutory debt on time. </li></ul><ul><ul><li>Not all debt is created equal </li></ul></ul><ul><ul><li>Directors and officers can be personally liable for these debts </li></ul></ul>
  9. 9. TIP # 3 <ul><li>Ensure sufficient personal liability coverage. </li></ul><ul><ul><li>e.g. director’s, home and auto coverage </li></ul></ul><ul><ul><li>In the event of a serious accident your personal assets (e.g. home, car or boat) could be seized to pay any shortfall in insurance </li></ul></ul>
  10. 10. TIP # 4 <ul><li>Ensure your spouse is outside the reach of creditors in the event anything goes wrong in the business. </li></ul><ul><ul><li>Directors and officers can carry liability for debts </li></ul></ul><ul><ul><li>If your spouse is an employee, or not involved in the business, you’ll have much more flexibility in your creditor protection plan </li></ul></ul>
  11. 11. TIP # 5 <ul><li>Make use of spousal RRSPs to transfer wealth to a spouse. </li></ul><ul><ul><li>Move personal wealth away from creditor risk </li></ul></ul>
  12. 12. TIP # 6 <ul><li>Consider moving personal assets to your spouse’s name. </li></ul><ul><ul><li>e.g. your house and savings </li></ul></ul><ul><ul><li>Home ownership can be transferred to your spouse tax-free </li></ul></ul><ul><ul><li>If your spouse is involved in the business, consider setting up a family trust </li></ul></ul>
  13. 13. TIP # 7 <ul><li>Hold life insurance contracts personally </li></ul><ul><li>(not corporately). </li></ul><ul><ul><li>Name a “family class” beneficiary on life insurance contracts and list yourself as both the owner and the life insured </li></ul></ul><ul><ul><li>Can prevent creditors from seizing the assets, as well as ensuring assets transfer immediately to your beneficiary at your death </li></ul></ul><ul><ul><li>If the death benefit is payable to your estate, your assets can get tied up in probate and may be subject to fees </li></ul></ul>
  14. 14. TIP # 8 <ul><li>Place your savings into investment products sold by insurance companies. </li></ul><ul><ul><li>Segregated funds and GICs from an insurance company can offer the same potential for creditor protection as regular life insurance </li></ul></ul><ul><ul><li>Name a “family class” or irrevocable beneficiary on the investment </li></ul></ul>
  15. 15. TIP # 9 <ul><li>Get professional tax and legal advise on a creditor protection plan. </li></ul><ul><ul><li>This is not a “do-it-yourself” plan </li></ul></ul>
  16. 16. TIP # 10 <ul><li>Make a plan now. </li></ul><ul><ul><li>Once a business is in trouble, it’s almost impossible to establish a creditor protection plan </li></ul></ul><ul><ul><li>It must be done while the business is healthy or new </li></ul></ul>
  17. 17. TAKE ACTION <ul><li>At Diatel & Fedullo Wealth Management, we can help you develop a creditor protection plan with the assistance of legal and tax professionals. To learn more about this, contact Mark Diatel today. </li></ul><ul><li>Email: [email_address] </li></ul><ul><li>Tel: (416) 270-1343 </li></ul>

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