Launching a business is a huge milestone. Business owners know how much blood, sweat, and tears go into a business’s formation, and into its maintenance too. But what many don’t stop to think about is how to safeguard it for the long haul.
Investing in business protection isn’t a luxury; it’s a necessity in today’s world of disinformation, heightened litigation, and fraud.
At its core, business protection is built on several foundational pillars, including entity structure, tax strategy, contracts, and insurance coverage. Together, these elements form a comprehensive framework designed to preserve assets and minimize risk.
“A business must be structured correctly from the beginning,” says Carolyn Northcutt, founder of Allen Texas Attorneys, senior attorney managing member, CPA, and real estate broker. “For example, a real estate investor may benefit from a Series LLC, which helps shield individual properties from liabilities associated with others. In other cases, an S Corporation or C Corporation may be the more appropriate choice.”
Business structure and taxation are closely intertwined, Northcutt explains. “Entrepreneurs should never pay more tax than legally required. I’ve seen situations where a business owner formed an LLC with the advice of a CPA but didn’t make the proper tax election and ended up paying significantly more than necessary.”
Contracts and insurance are other elements that complete the framework. “Strong contracts are a proactive measure which can prevent disputes before they arise,” Northcutt adds. “Insurance then serves as another layer, ensuring the business is protected with the correct type of policy, especially if the unexpected occurs.”
These risk mitigation elements double as business strategies that concurrently act as layers of protection. While applying all of these layers are especially beneficial for high-net-worth individuals, an attorney can help discern which of the layers are relevant to you if you’re a solo entrepreneur or a mom-and-pop shop as well.
Protecting your business through estate planning is an important consideration too. “A critical question many owners overlook is what happens to the business if something happens to them,” says attorney Kayla Smith Wood. “Who is authorized to run the business if you’re incapacitated, and who ultimately inherits the ownership of the business, are two separate considerations. Both must be clearly addressed in business documents and estate plans.”
Understanding how estate planning may change in the future, especially with legislation that is constantly moving, is a niche that an attorney can help with. For example, after Trump’s Big Beautiful Bill emerged, changes surfaced on how much inheritance parents can pass on to their children. The bill increased the dollar amount of inheritance that is exempt from federal estate tax to $15 million per person, and $30 million for a married couple.
Most consumers don’t consider how this might play out in their succession planning and long-term business preservation. While no one has a crystal ball, consulting with an attorney can help to anticipate risks that are coming over the horizon.
Educating clients on these pillars, and the benefits of business continuity planning, is increasingly important—and even more so in the age of AI.
“Using AI to write your own will without the correct parameters and clauses and without legal consult can lead to tragedy,” Northcutt reflects.
“AI simply cannot replace the human element and that eye-to-eye contact between an attorney and their client,” Wood adds.
Many consumers pursue the AI avenue because it’s free. But what value are you really getting in return? Similarly, choosing an attorney solely because of a free consultation or the lowest fee can be shortsighted. Wood and Northcutt recommend “shopping around” and meeting with multiple local attorneys to better understand their fee structures.
Another reason to shop around is to gauge how collaborative an attorney may be. For example, a particular red flag, they note, is when attorneys consistently position themselves as executors only for high-net-worth estates. “If a client absolutely does not have a trusted individual or family member to act as their executor, then it may be appropriate for the attorney to be assigned as the executor,” Northcutt explains.
It’s obvious that selecting the right legal partner isn’t always a straightforward process. Seeking referrals, reading client reviews, and meeting with the attorney directly during the initial consultation (in lieu of a paralegal or admin) are critical too.
“The one thing that’s nonnegotiable for me is that an attorney is both knowledgeable and approachable and is someone who I can see myself building a relationship with,” adds Wood.
“For me, an attorney who can explain everything in the estate plan or business document without throwing around big, complex legal terms, or make you feel like you can’t ask questions, is key,” says Northcutt.
Don’t take shortcuts when it comes to protecting your business. For more information, contact Allen Texas Attorneys at 80 E. McDermott Drive, Allen, TX 75002, (972) 390-1608 or at allentexasattorney.com.
Investing in business protection isn’t a luxury; it’s a necessity in today’s world of disinformation, heightened litigation, and fraud.