The fundamentals of maintaining and operating a successful business are straightforward: bring in more money than you spend. However, understanding how money can leave your business is critical. In addition to the money you invest into products and human capital, having to defend your company against lawsuits can pose a serious financial threat.
Litigation can be a result of anyone your business has interactions with, and this could come in the form of consumers, employees, and outside vendors. After identifying the potential risks, you can mitigate each one to limit the likelihood of litigation.
Protect Yourself In Writing
When disputes arise, you need to rely on the contract that governs the relationship you have with this vendor or employee. Your specific needs regarding the degree and kind of your contracts depend on your situation. The underlying principle is to ensure an attorney drafts your contract, and you need a document that is custom to your business needs. Boilerplate contracts may seem quick, but they may not offer you the protection you require.
Consider Your Assets
Separate your personal assets from your business ones. Choosing a business entity, such as a Limited Liability Corporation (LLC), prevents business creditors from coming after your personal assets like your home.
Much like the risk associated with DIY contracts, choosing to run your business as a sole proprietor or a general partnership may seem the easiest way to get your company up and running. But what risks are you taking on by doing so? It is important to note that you may end up choosing to be a sole proprietor—but you should strongly consider all the entities available to you.
Choose An Insurance Policy
Even with the best insurance policy, you cannot avoid liability. But insurance can assist with some of the significant costs associated with liability, such as your attorney’s fees.
Choosing the right policy for your business hinges on talking to multiple insurance brokers while also verifying that what they offer aligns with your business needs. Depending on how large or diverse your business is, there is a possibility that you will need multiple insurance policies.
Cueto Law Group, P.L.
For more than a decade, the Cueto Law Group has been helping clients with a wide range of issues associated with business litigation. If you are a small to medium-sized business that needs professional legal assistance with contract reviews, operating agreements, or need to sue (or are being sued), contact us to schedule a consultation.
