Protecting Your Privacy as an Entrepreneur
As an entrepreneur, you’ll have a lot of things on your mind to launch your business. Not only must you build a great product or service, find good people, and discover your process, but you must also handle the administrative paperwork. Sometimes the legal paperwork can feel overwhelming, but ultimately is necessary.
As your business grows, so will your reputation as an entrepreneur. While success is what you’re striving for, it comes with its own challenges. The one I’ll be talking about today is your privacy.
We’ve heard a lot about privacy in the news over the past few years. As technology advances, people question how safe your information truly is. With news stories of certain companies collecting and selling your data, we can see that the Internet is not always the most private place. Even with the advent of social media a decade ago, we were warned that once something is out there—it’s out there forever.
While data security is extremely important, I want to focus on a slightly different type of privacy. Your legal privacy.
On the “Protecting Your Privacy and Assets” episode of the Making Bank podcast, guest Jonathan Feniak explains how there are certain laws that protect your business more than others. For example, Wyoming, Nevada, and sometimes Delaware, have specific laws in place to ensure the safety and privacy of business owners that other states do not.
But you’re a business owner with insurance—aren’t you fine? Possibly. Maybe not. Jonathan explains how many entrepreneurs may not even pick the right insurance for them. So, it’s important to not only do your research, but be thorough in your research.
However, your protection as an entrepreneur can be threatened by more than just the wrong insurance. For example, Wyoming does not have to put an entrepreneur’s name in the public records. Instead, they can put the name of the entrepreneur’s attorney. Why does this matter?
The thing is, while having a business is great, it can also put a target on your back. Once people know you run a business, which can be pretty easy to figure out, they can try to come for you and your money.
While you buy insurance and produce a safe product, sometimes accidents happen. Sometimes customers or employees get hurt and it would be naïve to think it couldn’t happen to you. When this occurs, there will be a claim. But not all states will protect the business owner when it comes to settling claims. Jonathan Feniak spoke about a specific example of this targeting that can really hurt business owners called piercing the veil. Piercing the Veil occurs when a claim is so great that it can go after the owner as a person, instead of just the business itself. The issue with this particular incident is that the laws in most states are pretty vague, leaving the decision up to the discretion of the judge. In Wyoming, for example, the laws surrounding piercing the veil are more rigid and offer greater protection to the business owner.
So, what can you do about this?
The first and most important thing you can do as an entrepreneur to ensure your legal protection is to be conscientious of it. Make sure to weave in all types of legality to the very start of your operations, just as you would with the right paperwork to form the business.
From the beginning, do your research on which states would be best to start a business. Just as you would study your numbers on the best practices for the best profit, you need to check up on the laws as well. The last thing you want is to be blindsided by both—finding yourself in a legal and expensive situation. In other words, it’s an avoidable mistake, so you have nothing to lose by spending the time.
In terms of covering all your bases, it’s also important to continue to do so. As your business grows, your legal armor should as well. When you take on new employees, when you expand your product line, and when you open up other locations, it’s important to keep your legal coverage up to date. You may be tempted to not spend the money or time on protection that you ultimately may not need—but the risk isn’t worth it. At the end of the day, legality is not where you want to cut corners.
Lastly, and most importantly, be honest with yourself as to your limits. If you need legal advice, ask for it. If you need to be educated and consulted, find an attorney. Unless you have a law degree yourself, no amount of research can replace a professional. Find an attorney, speak to them and hire them.
Ultimately, you are an entrepreneur, and your job is to run a successful business. Get someone trained on your side that can take care of the paperwork to make sure you can be successful. Even though something may never happen, something could—and eventually might. You must protect your business and yourself when that day comes.