How can we protect our personal assets when setting up a company?
My partner and I want to start a catering business and we think a company might be for us. However it is just the two of us and we are worried about losing our home if something goes wrong. How can it be protected? What is the best way to set up our company?
Lawyer Answers (1): Answers from lawyers are general preliminary responses. They are not formal legal advice and cannot taken account of all your circumstances. They do not create a lawyer–client relationship.
- For asset protection in this situation you could choose to nominate one of you as the director and the other could be a shareholder.
- It would be best for the shareholder to hold the house in their name as they are generally better protected from personal liability than a director is.
- However depending on the legal status of your relationship you may not be comfortable with the domestic risks of holding your principal place of residence in one person's name.
- That said the corporate structure is generally a lot better suited for personal asset protection than a sole trader or partnership arrangement. A trust structure may be an option for you too. You can find out more about these different structures from our other topics on Business and Company Law.