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Creditor-Proofing Techniques for Your Incorporated Business

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Whether you’ve built your own business from the ground up or have been tasked with taking over the long-time family business, it would be prudent to ensure the hard-earned assets contained in your business are protected as much as possible from third parties, namely creditors.  Creditor proofing for a business owner means protecting significant business assets from exposure to potential future creditors – that is, from persons who may have legal rights against the business and its property for various reasons (e.g., for money owed). Although the law in Ontario generally prohibits creditor-proofing techniques performed with improper intent, such as those that hinder or impair the rights of existing creditors, it is perfectly acceptable (and highly recommended) to organize your business’ affairs in a way that reduces the risk of the business’ property becoming vulnerable to the claims of future creditors. There are numerous methods of structuring your business to minimize creditor risk that can and should be implemented to safeguard your business’ assets.


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