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Asset Protection for New Businesses in Western Australia
Are you worried that starting or buying a business might put your personal wealth at risk?
That’s a common worry and is something that as Perth-based business accountants we take great care in resolving for new business owners in WA (and Australia-wide too).
The Problem
When you launch or acquire a business, your excitement can quickly turn to concern if your personal assets—like your family home or savings—are at risk. Without the right structure, business risks and liabilities can seep into your personal finances. This means that a downturn or legal dispute in your business could potentially expose your hard-earned wealth to creditors and legal claims.
Our Solution
At Munro’s, our specialist business accountants understand that protecting your wealth is as important as driving your business forward. We help new business owners set up a robust asset protection strategy.
One of the key starting points in asset protection involves creating two distinct entities:
- Trading Entity: The arm of your business that carries out day-to-day operations and accepts business risks.
- Asset Holding Entity: A separate entity that holds your personal and investment assets—completely isolated from business liabilities.
A key component of this strategy is assigning distinct roles within your family:
- Risk-Taker: The individual who takes on business activities and assumes operational risks.
- Asset-Holder: The person responsible for owning critical assets, such as the family home.
This separation not only helps shields the assets from business liabilities, but, also reduces the attractiveness of your personal assets to potential legal claimants.
Key Benefits & Outcomes
By adopting a robust asset protection strategy, you will:
- Safeguard Your Wealth
- Reduce Legal Exposure
- Gain Peace of Mind
Read Key Points & Transcript
Assets & Liability Protection for a New Business
video key points
- Proper asset protection is crucial when starting or buying a business, ensuring the safeguarding of assets and wealth.
- Principle #1: Business risks must be kept separate from investment assets, necessitating at least a “Level One” structure comprising a Trading Entity and an Asset Holding Entity, with the latter avoiding business relationships.
- Principle #2: Designate one individual within a Family Group as the “Risk-Taker” and another as the “Asset-Holder,” ensuring the Risk-Taker engages in business activities without holding assets in their name, making them less appealing for legal action.
- For effective asset protection, the Asset-Holder should own the family home outright and secure sufficient income to cover loans and asset repayments, preventing financial vulnerabilities in case of the Risk-Taker’s bankruptcy.
- To further explore asset protection strategies and their importance, see the Wealth Protection for Business page; or book a Get To Know Each Other meeting via the How We Get Started page.
Presented By: Saul Segal
video transcript
When you are looking at either starting or buying a business, considering asset protection strategies beforehand is vital. This is because it is very important that you take the time to properly protect your assets and wealth.
In this short video, we will introduce the first two principles of what asset protection is and why it is so important.
Principle #1: Separate Risk from Assets
- Business risks should be kept separate from investment assets.
- When running a business, you have risks whenever you enter into a contractual relationship with customers, suppliers and employees.
- In most cases, the minimum business structure required will include a trading entity and a separate Asset Holding Entity. We call this a “Level One” Structure.
- The Asset Holding Entity should never have business relationships, it should only invest or loan funds to related entities.
Principle #2: Choose a Risk-Taker and an Asset-Holder
- Within a Family Group, you should choose one individual to be a “Risk-Taker” and another individual to be an “Asset-Holder”.
- The Risk-Taker should be the main person involved in your business and therefore should be the director and/or trustee of the trading companies.
- The Asset-Holder should not be, or act, or seen to be acting as a director of any trading company. The Asset-Holder should be in control as a director, trustee and shareholder of any Asset Holding Entity.
- Where possible, the Risk-Taker should not own any assets in their own name. The Risk-Taker should be an “unattractive” target to take legal action against. If possible, the family home should be owned 100% by the Asset-Holder.
- The Asset-Holder should earn or receive enough annual income from fully franked dividends or trust distributions to cover loans repayments for the family home and any other assets in their name. Otherwise, if the Risk-Taker is made bankrupt, their Bankruptcy Trustee may attempt to claw back what is known as contributed equity if the Risk-Taker has made loan repayments on assets held by the Asset-Holder.
If you’re interested in learning more about asset protection strategies, then watch our videos on basic and advanced asset protection strategies over on the Wealth Protection for Business page; or book a Get To Know Each Other meeting via the How We Get Started page.
We’re here to help.
Frequently Asked Questions for New Business Asset Protection
- What is asset protection?
Asset protection involves designing a business structure and procedure that separates your investments and wealth from the risks and liabilities of your business operations. With the right structure, your family home, savings and other valuable assets remain secure from potential legal or financial claims. - Why is asset protection crucial when starting or buying a business?
Starting or acquiring a business can expose your personal assets to unexpected risks. Without proper protection, business liabilities might put your family’s wealth at risk. - Can asset protection help minimise my tax liabilities?
While asset protection primarily aims to safeguard your wealth, a well-structured setup can also create tax efficiencies. - How do Munro’s business accountants assist with asset protection?
Our specialist accountants work closely with you to assess your current structure and then design a customised asset protection strategy. Generally, the best place to start is with an Advanced Tax & Asset Protection Strategies report. - Are your asset protection services effective across Australia?
Although Munro’s is based in Perth, our asset protection and advisory service are designed to comply with national regulations. This means our methods are effective for businesses throughout Australia, not just locally. - How can I be confident in Munro’s for asset protection?
Munro’s has been a trusted business accountant to many clients since 1973. Our specialist team is committed to safeguarding your wealth, minimising your taxes and delivering high-quality, responsive accounting services. Evidence of this is found in our over 100 5‑star Google reviews. - What is the price for your asset protection service?
Our pricing is transparent and reflects the complexity of your needs. Please visit our pricing page and contact us for a personalised quote. - How do I get started with Munro’s accounting services?
We can start with a free initial meeting.
Accounting & Advisory for New Businesses
Starting a Business
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