Do you risk all that you have when starting a new business?

min read
Opinions expressed by Entrepreneur contributors are their own.
One simple way to protect your personal assets is to form a corporation or limited liability company through which you will conduct your daily business. That’s a clear way to separate your personal assets from your business assets, especially once you open and use a separate bank account for the company’s financial affairs.

However, you may run into transactions where the other side would want you to provide a personal guaranty. Landlords and banks are often queasy about working with brand-new companies. Therefore, they will want you to "guarantee" that you personally will make good on the debt if the company goes out of business. In those limited situations, your personal assets would be at risk.

Another way to ensure that you don’t "risk the farm" is to put together a careful business plan and have sufficient funds set aside to get started, so you don’t have to ask others to loan you money.

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur