How Small Business Owners Can Protect Themselves Financially

As a small business owner, you put your blood, sweat, and tears into bringing your dreams to life. You’re passionate about what you’ve built, and it’s that same passion that drives your business’ success. However, as wonderful as it is to be invested in your business, you need financial boundaries to protect your family’s assets.

Sole proprietorship of a business comes with unlimited liability, meaning that there is no distinction between your personal assets and those of your business. Without the appropriate financial boundaries in place, that business you love could set you up for financial ruin if something were to go wrong. 

Here are a few ways that small business owners can protect themselves financially.

1. Have Liability Insurance

Though it can be a considerable expense, liability insurance will protect your business from an event, such as a lawsuit, that could drain the business’ assets as well as your own. Depending on the type of business, you may need different types of liability insurance. Here are a few of the most common types:

General Liability Insurance: This type of insurance protects you from paying damages or injuries to third parties as well as lawsuits.

Product Liability Insurance: In the event that your product causes harm or injury, this insurance protects your business.

Cyber Liability Insurance: If you collect, store, or transfer customer data digitally, your business is financially vulnerable to a data breach. This insurance protects you from the devastating effects of your systems being hacked.

2. Form an LLC

Under a sole proprietorship, you and your business assets are one, without distinction. So, as we mentioned, if you found yourself in a situation where your business’ assets were in jeopardy, the same would go for your personal assets. You can form a boundary between your personal assets and those of your business by forming a Limited Liability Corporation (LLC). This is an effective way to protect yourself and your business without much extra expense.

3. Hire Independent Contractors

When appropriate, working with independent contractors instead of employees can reduce your business’ liability. The laws surrounding this vary state by state and by the nature of your business. However, in most states and for most businesses, your business is not liable for acts of negligence or damages caused by a contractor.

4. Title Your Home as “Tenancy by Entirety”

Like most business and legal matters, this varies by state, but if you are married, you can change your home’s title to “tenancy by entirety.” This change is inexpensive and protects the home from being included in the proceedings of a lawsuit, should you or your spouse be sued.

5. Consult Your Financial Advisor

As a small business owner, trying to manage your personal and business finances at the same time is a great deal of work and the lines can easily become blurred. To protect your assets, consider reaching out to your financial advisor. They can design a plan that not only protects both your personal finances and business, but they can also help you reach your financial goals for each.  

Ready to reach your highest goals and work toward the life of your dreams? Contact us today to schedule your first appointment.

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Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.