By JOY PERRINO CHOQUETTE

The football team steps onto the playing field, bright lights shining on their shoulders. The crowd gasps: not one player is wearing protective equipment. No pads, no helmets, no mouth guards.

Dangerous? Absolutely. And, while most business owners would consider stepping into an arena where hundreds of pounds of human flesh propelled by speed and brute strength to be a scary proposition, they may not think twice about the fact that their business assets are much like those unprotected football players: completely vulnerable.

Business owners who ignore the protection of their business assets leave themselves open to potentially painful consequences. Peter Walcott of Life Cycle Financial in South Burlington said business owners often overlook their company’s most valuable business benefit.

“The most valuable asset is the business owner him or herself,” said Walcott. “A key question is what happens to the business if the business owner is out of the picture, either because of sickness, injury or premature death.”

While these are situations that no one likes to contemplate, planning for catastrophic situations can make the difference between retaining and losing a business. And, it’s not always just the business owner who is dependant on the income from the business, said Walcott. Family can also be negatively affected if preventive planning isn’t done to protect a business’s assets.

So, what can be done to protect business assets? Walcott said there are typically two forms of protection: large amounts of liquid assets held in reserve, or insurance.

“Purchasing insurance tends to be the much more efficient way to protect business assets,” said Walcott. He said there is a distinction however, between human and physical assets.

An owner should – and often does – purchase property and casualty insurance. However, “what’s often missed,” said Walcott, “is protection for the human element.”

Insurance can be purchased for the “key person” in a business, said Walcott. This can include the owner, as well as another person who is integral to the business and its success.

Needs for asset protection can differ somewhat, depending on the type of business.

“If you own a business in your own name, you will be personally liable,” said Stephen Unsworth, an attorney with Unsworth & Barra, PLC in Essex Junction. “However, if you set up a sole-member LLC, you can have significant asset protection from things your employees do or if your business is sued.”

Under federal law, said Unsworth, a sole-member LLC is treated as a disregarded entity by the IRS. “This means that you still own your social security number, you do not have to fill out any new tax forms and you do not have to pay a minimum entity tax for the state of Vermont.”

The process is a “quick and reasonable way to set up a corporation that offers a great deal of protection with a minimum of fuss,” he said.

Creating a business entity “sets up a sort of roadblock,” said Brian Monaghan, an attorney with Walsh & Monaghan, LLP.

Monaghan, who deals with business law at his Burlington and St. Albans offices, said the creation of a business entity helps to “shield the business assets.” And, while laws that pertain to business asset protection have remained the same for many years, an amplified amount of media attention is partially responsible for the increased awareness of the need for business asset protection.

“This has always been a key function in running a well-run business,” said Monaghan. “Lay people are becoming more keenly aware of it than they used to be, because they’re seeing a lot of businesses go defunct: even businesses which we thought were invincible in the past.”

The consequences of not protecting ones business assets could be severe, said Unsworth. “If you don’t take steps to limit your liability, you could be held personally liable for the acts of your business or for the acts of employees in your business.

“This could lead to disastrous results. By having a limited liability company, only the business assets can be held to satisfy claims against your business and not your personal assets.”

Although certain personal financial incomes such as child support and some forms of government aid cannot be attached to a lawsuit, said Monaghan, there are still other detriments that come along with court proceedings.

“There’s certainly a huge emotional factor that is above even the financial aspect,” said Monaghan. “It’s going to really affect your life, and I’ve seen that happen to clients.”

What are some of the most important things to consider when exploring possible protection of business assets? First, business owners should do their homework.

Monaghan suggests researching asset protection through the U.S. Small Business Administration, the local chamber of commerce and financial planners. He also recommends perusing information on the Internet. “It’s a good place to get your mind wrapped around this stuff and educate yourself,” said Monaghan. The Vermont Secretary of State’s Web page at www.sec.state.vt.us/corps/index.htm offers in-depth information as well.

“Talk to a lawyer to make sure your business is really protected, though,” said Monaghan.

Walcott encourages new and veteran business owners to consider the importance of protecting their business assets. “It’s like car insurance,” said Walcott. “We all need it, but nobody likes to think about it.”