As a micro business entrepreneur, it’s your responsibility to do everything possible to limit risk if you want your newly launched business to keep running without friction.
But what does it take to keep down the likelihood of a lawsuit and ensure continuity in business? Discover five ways to protect your company from the prying eyes of the law.
- Watch your words and actions
Owners and their personnel should avoid conducting questionable deals or making public statements that may raise concerns. This means avoiding possibly libellous statements and not doing any business with potentially unscrupulous people.
Having a reputable name won’t do you much good if someday word gets out that you’ve been working with a shoddy industry player. Your company’s name will hit the headlines for the scandal, and you’ll have a hefty lawsuit to handle. Lastly, and most importantly, you should also avoid cases where a conflict of interest may arise.
- Hire a reliable legal representative
Find a legal representative when starting a firm so that you have a standby legal contact in case of any issues. A professional advocate like Attorney Kenneth A Wilhelm can advise you on how to react before or during prosecution.
Preferably, choose a lawyer that’s familiar with the local laws in the area where your firm operates. Be ready to retain an attorney with expertise in a particular field, if necessary. For instance, if you foresee facing legal issues from the IRS or your State’s tax department, then it is wise to hire a company tax lawyer.
- Cover your business
Seek critical forms of cover like liability insurance so that you are protected for instance, in case a customer gets hurt in your place of business. Your insurance agents should also get you errors and omissions coverage to make sure the company is safeguarded from client claims that your business made an error, or did not hold its end of a contract.
Large business should also get a directors and officers liability (D&O) insurance to protect the directors’ personal assets in the event of a larger lawsuit against the firm.
On top of insurance, another way steer clear of liability is to protect yourself in your contracts. Put to ink that you are and what you are not liable for with guidance from your attorney.
- Isolate yourself from your enterprise
Most business-owning entrepreneurs own, register and run their business enterprises as sole proprietorships. The downside to this is that in case the firm is prosecuted, your individual assets (like your property or cars) are at risk of being targeted in a law court.
The remedy; have a trust own your company. Trusts are legal entities that file their own tax returns and can hold businesses, cash, securities, property, and many other forms of assets. So if a legal trust owns your firm, and your company issued only the trust’s assets are at risk in a law court (your personal assets remain safe).
You can also incorporate to ensure your business finances are separated from your personal finances. That way, you shield your personal assets in case a lawsuit turns sour.
- Protect company data
Cybercriminals are on the search for weak points to exploit and loot. Safeguard and backup your business files, updated all critical security software and antivirus to make sure you stay protected at all times. Stolen data could compromise operations and ruin your relationship with your client.
Regular backups are critical for recovery in the event of a sudden technological breakdown. Backing them up off-site is another way to tread carefully in case of a disaster.
Now you know the five most sensitive points to protect your company from lethal lawsuits.