2015 is winding down, and if you’re like many business owners, you’re probably focused on setting goals and planning for next year.
Getting ready for the new year should entail more than just identifying new opportunities, though. Year-end is an ideal time to review where you stand in terms of protecting your business against unforeseen circumstances — especially when you are a small-business owner and have your personal assets tied up in the business. Just one misstep can cause not only your business to flounder, but when your personal assets, including your bank account or home, are linked to the enterprise, you could find that you’re facing personal bankruptcy, foreclosure, and worse when something goes wrong.
So as you plan for 2016, consider how secure your assets really are, and make some changes now to ensure that the worst doesn’t happen.
While there are many methods for protecting your assets, insurance is one that you should never overlook, and should always make room in the budget for. Many fields, including financial services, medicine, and law, require practitioners to carry errors and omissions coverage in order to maintain a license, but even if you aren’t required to cover your business against mistakes that you make, you should carry the coverage.
Don’t assume that a policy will cover both your business and the physical space in which it is located; for example, if someone slips and falls at your place of business, liability coverage will kick in, but that same policy won’t cover you if the building catches on fire and destroys all of your equipment.
The major benefit of carrying adequate insurance on your business is that in the event that something does happen, your insurance will cover the costs and you and your business will not be out the cash. In some cases, claimants can attempt to go after your personal assets, but usually, your insurance will cover everything. This assumes, of course, that your policy is adequate.
Carefully review all of the coverages you have in place and confirm that the limits reflect the current state of your business. The coverage you purchased as a startup probably won’t be enough protection after a few successful years. It’s also possible that your state laws have changed, so compare the policies you have and make any changes now before you come up short.
Choose the Right Entity
When you first started your business, how did you organize it? Many small-business owners opt for a sole proprietorship in the early days, since it’s ostensibly the easiest one to manage. However, when you are the sole owner of a business, your assets — including your personal assets — are vulnerable to lawsuits. Should your business experience financial difficulties, establishing a corporation also prevents creditors from coming after your personal assets to satisfy the business debt, in most cases.
That’s why many experts recommend that small-business owners establish an LLC or S Corp to keep their personal assets safe in the event of a claim against the business. Either scenario creates some tax implications, so it’s best to work with an experienced attorney or tax professional in order to make the right designation. If you are operating as a sole proprietorship, schedule an appointment to discuss your options and begin the process before year-end, so that the 2016 tax year is more easily manageable.
Consider a Trust
Another often-overlooked asset protection vehicle is the trust. If you are nearing retirement age, or you want to pass the business on to your children eventually, placing it in a trust can be a smart decision. Establishing a living trust does not mean that you have to give up the control of your business, as you can establish yourself as both the trustee and the beneficiary.
You’ll need to designate a backup trustee to manage the trust should you die or become incapacitated, but the benefit of a trust is that should you die, your business will not have to go through probate and it’s more likely that your wishes for the business after your death will be followed.
Like corporate structures, trusts do come with some tax implications, so it’s best to work with an attorney. It’s also important to note that when you set up a revocable living trust — the most common type of trust — your assets are still considered yours, and therefore subject to creditor collection. Certain types of trusts can keep your assets out of creditor hands, but they tend to be complex and not always favorable to the typical small-business owner.
Separate Business and Personal Assets
It’s small business 101: You always keep business and personal assets separate. But for many small-business owners, especially sole proprietors, that’s easier said than done. However, it’s important for many reasons, not the least of which is failing to do so can create some major headaches with the IRS. The practice of “commingling assets,” which is a fancy way of saying that you pay business and personal expenses out of the same accounts is often a red flag to the IRS, and can lead the agency to question deductions.
Failing to separate your business and personal finances properly also leaves you open to liability. Claims against your business will be satisfied by those accounts, leaving you without any personal assets. The need to separate assets goes beyond just maintaining separate bank accounts, though. When possible, if you open a business credit account, do so without tying it to your personal finances to avoid affecting your own credit.
In addition, if you have made any personal guarantees using your own property, such as your home, to gain financing, look into options for changing your arrangement to protect your property. After several successful years in business, you may have options for financing that weren’t available to you when you first opened your doors. If that’s the case, there is no reason to continue placing your home or other property at risk. As a bonus, refinancing might even reduce your overhead, allowing you to run your business more efficiently.
Owning a business is an inherently risky proposition. However, there’s no reason that you need to create unnecessary risk to your personal assets in order to run a successful enterprise. By reviewing your insurance coverage, business structure, and asset mix, and making the changes now, you can move into next year confident that even if the worst happens, you won’t lose everything.
England soccer star Rashford nets younger buyers for Burberry
By Sarah Young
LONDON (Reuters) – Burberry stuck to its full-year goals on Wednesday after a media campaign fronted by high-profile English soccer star and social justice advocate Marcus Rashford drew a younger clientele to the British luxury brand.
Higher full-price sales would boost annual margins and Asian demand remained strong, Burberry said, while warning that it could suffer more sales disruption from COVID-19 lockdowns.
Manchester United striker Rashford, 23, has won plaudits for his campaign to help ensure that poorer children do not go hungry with schools closed during the pandemic.
A first coronavirus wave last year cut Burberry’s sales by as much as 45% before a bounce back on strong demand in mainland China and South Korea, which continued in the last few months.
Shares in Burberry were up 5% to 1,825 pence at 0905 GMT, with Citi analysts saying that improved sales quality from fewer markdowns would drive full-year consensus upgrades.
Burberry’s 9% sales decline in its third quarter was worse than the 6% fall in the second, and the company said that 15% of stores were currently closed and 36% operating with restrictions as a result of measures to curb COVID-19’s spread.
“We expect trading will remain susceptible to regional disruptions as we close the financial year,” Burberry said, adding that it was confident of rebounding when the pandemic eases given the brand’s resonance with customers.
In the third quarter, comparable store sales in Europe, the Middle East, India and Africa declined 37%, hit by shops shut in lockdowns and a lack of tourists visiting Europe, but in the same period, it posted sales growth of 11% in Asia Pacific.
Burberry said that Britain’s new relationship with the European Union would cause headwinds, warning of a modest increase in costs to comply with new rules and also the impact of an end to a scheme for VAT refunds for non-EU tourists.
This would make Britain a less attractive destination for luxury shopping when tourism returns after the pandemic, Burberry said, adding that it would try to mitigate the effect.
(Reporting by Sarah Young; Editing by Kate Holton, James Davey and Alexander Smith)
Alibaba’s Jack Ma makes first live appearance in three months in online meet
SHANGHAI (Reuters) – Alibaba Group founder Jack Ma met 100 rural teachers in China via a live video meeting on Wednesday morning, in the businessman’s first appearance since October, triggering a sharp jump in the Hong Kong listed shares of the e-commerce giant.
Social media speculation over the whereabouts of China’s highest-profile entrepreneur swirled this month after news reports that he missed the final episode of a TV show featuring him as a judge, amid a regulatory clampdown by Beijing on his sprawling business empire.
Ma had not appeared in public since Oct. 24, where he blasted China’s regulatory system in a speech at a Shanghai forum that set him on a collision course with officials, leading to suspension of a $37-billion IPO of Alibaba’s financial affiliate Ant Group.
Tianmu News, a news portal under Zhejiang Online, which is backed by the provincial Zhejiang government, first reported that Ma had met with the teachers via a live video conference on Wednesday.
The Jack Ma Foundation said that Ma participated in the online ceremony of the annual Rural Teacher Initiative event on Wednesday. Alibaba Group also confirmed that Jack Ma attended the online event.
Alibaba’s Hong Kong-listed shares jumped more than 6% after the reports of his reappearance, compared with a 0.64% rise in the Hang Seng index.
Ma’s public appearance comes as Alibaba plans to raise at least $5 billion through the sale of a U.S. dollar-denominated bond this month. Reuters reported the bond proceeds could reach $8 billion, which the e-commerce leader was likely to use for general corporate expenditure.
Alibaba is also the target of an antitrust investigation launched last month by Chinese authorities, who have in recent months accelerated a crackdown on anticompetitive behaviour in China’s booming internet space.
In the 50-second video, Ma, dressed in a navy pullover, spoke directly to the camera from a room with grey marble walls and a striped carpet. It was not clear from the video or the Tianmu News article where he was speaking from.
He addressed teachers receiving the Jack Ma Rural Teachers Award, who in previous years would have attended a ceremony organised by the Jack Ma Foundation in the Chinese seaside city of Sanya.
“We cannot meet in Sanya due to the epidemic,” he said in the speech, which did not discuss his whereabouts. “When the epidemic is over, we must find time to make up for everyone’s trip to Sanya, and then we will meet again!”
Xie Pu, founder of Chinese tech website Techie Crab, said the media and public had over-interpreted Ma’s move to lay low and that his step away from the public spotlight should not have been seen as a problem for Alibaba.
“We shouldn’t over-interpret his reappearance into public view this time, said Xie Pu, founder of Chinese tech website Techie Crab. “Alibaba still has a good governance structure — there are partners and a board of directors.”
(Reporting by Brenda Goh in Shanghai, Kane Wu and Sumeet Chatterjee in Hong Kong, Yingzhi Yang in Beijing; Editing by Tom Hogue and Gerry Doyle)
ComplyAdvantage Releases State Of Financial Crime Report For 2021
Designed as an must-have strategic roadmap for compliance teams, the comprehensive report covers financial crime insights related to fraud, cyber, and money laundering, the rise of crypto,
and the ever-changing sanctions landscape
ComplyAdvantage, a global data technology company transforming financial crime detection, today announced the availability of the firm’s much anticipated report The State Of Financial Crime 2021. Designed as a strategic guide for global compliance teams, the report lays out the many emerging threats that governments and financial institutions will face in 2021, along with prescriptive recommendations for implementing best compliance practices for combating financial crimes.
The research on which The State Of Financial Crime 2021 report is based was administered in November and December 2020. Interviews were conducted with 600 C-suite and senior compliance decision makers across North America, Europe, and Asia Pacific. The respondents represented enterprise banking, investments, crypto, insurance organizations, and fintechs.
One of the biggest challenges that compliance teams face is keeping current on the rapidly evolving regulations, and the advances of criminal behavior while balancing their organizations’ risk appetite. Risk indicators are also becoming harder to spot as the amount of information available grows exponentially and the speed of change gathers pace. This is why ComplyAdvantage has dedicated the company’s resources and anti-money laundering (AML) expertise in order to help compliance executives mitigate regulatory risks related to the most extreme AML financial crimes.
The State Of Financial Crime 2021 delves into the most important financial crime trends that Compliance Officers are most concerned with in the coming year. Specifically, these trends include increased fraud related to COVID-19 relief; risk vulnerabilities related to inconsistencies in global AML and counter financing of terrorism (CFT) system; the growth in sophistication of computer and mobile-enabled cybercrimes via payment systems; the continued use of sanctions as a tool of first resort and more.
A sample of key insights from the report include:
- SARs filing was on the rise with 74% of respondents saying they filed more SARS in 2020 than the previous year
- 93% of respondents stated that real-time AML risk data would improve their compliance operations
- Cybersecurity and third party risk management were noted as organizations’ biggest compliance-related pain points in 2020. With 54% of respondents ranking cybersecurity as a top pain point.
- 62% of respondents plan on upgrading their legacy systems in 2021.
- 54% of respondents plan on replacing or upgrading their transaction monitoring system in 2021.
“Due to the massive economic, political and social disruption brought about by COVID-19, international crime syndicates, rogue nations, global terrorists and cyber-criminals have become increasingly more aggressive, “said Charles Delingpolefounder and CEO of ComplyAdvantage. “Therefore, we felt it was imperative to prepare Compliance Officers and their teams for the potential onslaught of financial crimes driven by nefarious organizations.
Already the preferred choice of some of the world’s largest banks, enterprises and high-growth fintechs, ComplyAdvantage uses machine learning and natural language processing to help regulated organizations manage their risk obligations and prevent financial crime. The company’s proprietary database is derived from millions of data points that provide dynamic, real-time insights across sanctions, watchlists, politically exposed persons, and negative news. This reduces dependence on manual review processes and legacy databases by up to 80% and improves how companies screen and monitor clients and transactions.
ComplyAdvantage releases The State Of Financial Crime 2021 a comprehensive report covering financial crime trends related to fraud, cyber, and money laundering. #compliance #financialcrime #AML #antimoneylaundering #cybercrime
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