Operating and scaling a small business is no easy task, and there is a lot of risk you can incur along the way. Even with the best intentions, small business owners subject themselves to potential lawsuits everyday without their knowledge. In this article, we’re going to give you some tips and tricks to prevent you or your operation from being sued. With limited resources and razor-thin margins, this information is critical to small business owners.
Your actions and words can land you in legal trouble in an instant. Make sure your employees are good representations of your business and don’t create a negative image for your brand online or otherwise. This also means that you should work proactively to build positive rapport with your customers, the public, and establish working relationships with reputable vendors.
Next, avoid conflicts of interest within your business. If you’re caught dabbling in questionable areas, your business and its reputation will take a hit.
Create a legal separation.
Many business owners 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 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 business is owned by a properly established trust, 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, says Investopedia.
By incorporating your business, you are legally separating your assets from your business. If you’re sued, they cannot come after your personal assets or wealth.
Get the right insurance.
Much like you’d protect your home with a home insurance policy, you need to do the same for your business. A NJ Business Owners Policy or a CPP can give you the pertinent policies you need to operate each day without worry. This includes coverage for:
- Your building
- Other building contents
- Crime protection
- Product liability claims
- Income loss
- And more
About David G. Sayles Insurance Services
At David G. Sayles Insurance Services, we strive to protect the investments of homeowners like you. Our comprehensive policies are customized for you to provide the exact coverage you need. For more information, contact us today at (800) 439-0292.