As a business owner, it’s your responsibility to do everything within your means to limit risk and to keep the business running smoothly. But how does one go about limiting the possibility of a lawsuit to ensure business continuity?
In this article, we’ll take a look at five actions you can take today to protect your company for tomorrow.
- Watch What You Say and Do
First of all, when it comes to your business image, owners and their employees should avoid making any public announcements or conducting any business that might be considered questionable. This means avoiding things like libelous or potentially slanderous statements, but it also means not doing business with unscrupulous individuals.
Owners and their employees should avoid making any public announcements or conducting any business that might be considered questionable.
Business owners should interview attorneys when they first startup, to have a standby legal contact.
2. Hire a Competent Attorney
Business owners should interview attorneys when they first startup, to have a standby legal contact. You may need this person to advise you before you act or on how to react when you’ve been sued.
Owners should also attempt to secure an attorney that is familiar with local laws and customs in the area in which the business operates.
3. Separate Yourself From Your Business
Many entrepreneurs own and operate their businesses as sole proprietorships. The only problem with this is that in the event the company is sued, the owner’s individual assets (such as their cars or home) are fairly easy to attack or attach in a court of law.
The solution to this – or at least a way to limit the possibility that the owner’s personal assets might be the target of a suit – is to have a trust own the business. A trust is a legal entity that, in most cases, files its own tax return and can own property, businesses, cash, securities and a host of other assets. If a properly established trust owns a business, and it is sued, in most cases the only assets that can be attacked or attached in a court of law are those that are in the trust itself.
4. Insure Yourself
All businesses should obtain liability insurance in case (for example), a customer was to slip and fall in your place of business. Certain professionals, such as insurance agents and/or consultants should also consider obtaining errors, and omissions coverage to ensure the business would be protected should a customer or client accuse the owner of making some error, or not living up to a contract.
5. Protect Your Files
Most businesses these days work quite intensively on computers, so it makes sense to emphasize the safety requirements for your computer system. Businesses should have updated antivirus and other types of security software loaded and activated on their systems. If a computer system were to go down because of a virus, the business might be at risk of not being able to perform certain contracted work.
In the event of a massive technological breakdown, you should have a set of backed-up files to refer to. This could mean performing daily, weekly or even monthly backups, and making your clients aware of which you employ. Keeping these backup files off-site will also help to ensure your company’s continued safety. If you keep these files at your place of business, it is necessary to purchase a fireproof safe in which to store your files.
Consider securing alternative work sites, portable generators, call trees and/or ways to have employees work remotely to make it a little easier for your company to perform its work when the forces of nature throw you a curveball.
The Bottom Line
Business owners have the responsibility to protect their companies and their personal assets in the event of a lawsuit. With these five actions under your belt, your business should be well on its way to a legal- and hassle-free future.