Art Creative Ltd

How to Protect Yourself and Your Business from Liability

Martin Castilla            No comments            Feb, 14

Having a company that you can call your very own is exciting and beneficial to your future prospects. However, with owning a company comes the legal responsibilities that you have from one day to the next. If you are ever sued by a worker or customer, you could lose everything without the proper protection and coverage. Understanding how to protect both yourself and your company from a liability can help to keep the business running for many years to come.

Avoid Sole Proprietorship

Sole proprietorship simply means that there is no distinction between the owner of a company and the actual business itself. In the event of a lawsuit, if you don’t have enough coverage on your commercial assets, the legal system will come after your personal property. This could include your house, other real estate, your vehicles and anything that could be used as collateral to pay off legal fees and debts. Rather than begin your entrepreneurship as a sole proprietor, consider changing your legal status to a limited liability company, or LLC. This will protect your personal property and assets should something go wrong. For anyone seeking further guidance, the guide to starting an llc from Strategy Plus should answer your questions.

Obtain the Right Coverage

In the event of a lawsuit, having protection in the form of insurance coverage is an absolute necessity. You can obtain commercial insurance quotes online quickly and easily, and have the coverage that you need in a matter of just a few minutes. These policies will typically pay for legal fees, damages and other costs associated with a liability brought against your business. This prevents you from having to shell out the money yourself, which could result in the collapse of your enterprise.

Never Make Guarantees That You Can’t Back Up

One of the worst things an entrepreneur can do is to make claims and guarantees that they wouldn’t be able to back up. For instance, you might sell a product that you have a guarantee on, but when a customer takes you up on this claim, you back down and refuse to give them a refund or compensation. Likewise, it’s important to avoid making claims and promises to employees just as much as your customers. Don’t promise bonuses, promotions and raises if you aren’t planning on actually giving these incentives to your workers.

Have a Legal Team Available

Regardless of the type of company you own, you’ll want a legal team available at the ready when you need them. You never know when a disgruntled employee or client will bring a lawsuit against you. A legal team is there to help make settlements outside of the courtroom or provide you with valuable information when it comes to actually handling the situation. If you do need to go to court, they will be there to represent you, and they can help with insurance claims when they need to be filed.

Keep Detailed Documents Regarding the Business

As a business owner, it is crucial that you keep documents regarding your business and sales at all times. This paperwork is the proof needed if someone were to ever bring a lawsuit against you and your enterprise. Keep these documents detailed and well-filed so that they are easy to access when necessary. Get your legal team involved when making out the paperwork so that you know it’s being done properly.