Tips for Small Business Lawsuit Protection

Legal News  > Home >  Tips for Small Business Lawsuit Protection


When you are a small business owner, the last thing you want to happen is to learn you are being sued. Besides the time and money involved in preparing for and going to court, your business reputation hinges on the outcome. This article is about small business lawsuit protection and what you can do to protect yourself and your business.

Ensure You Have the Right Insurance

Having the right insurance is one of the best ways to avoid a lawsuit. The insurance will protect you if a customer slips in your establishment or an employee gets hurt on the job. Even if you are an insurance agent, you need errors and omissions insurance. This protects your business from accusations of not owning up to a contract or making errors.

Another type of insurance to protect your business, if you have employees, is workers compensation insurance. It is an essential part of your insurance package to carry workers’ compensation insurance. This insurance gives a small business lawsuit protection in the event of employee injury on the job. Guarding a business against experiencing a significant financial loss following a work accident.

If you run your business out of your home, you’ll need to be sure your home owner insurance has adequate coverage.

Follow Best Employment Practices

When you are a small business owner, you need to make sure you follow the best employment practices. Many laws dictate the way business is conducted. These laws protect employees from discrimination and harassment, ensuring employee’s right to privacy is guarded. If you have an employee claiming you committed illegitimate practices towards them, you need Employment Practice Liability Insurance.

Another important area to following employment practice is providing adequate solutions for corporate transport. As a business owner, you need to ensure reliable corporate transport for your employees. Transport in the case of disasters or other incidents to meetings or conferences. When you take every precaution possible to protect employees and customers, you provide yourself small business lawsuit protection.

Be Prepared With a Good Lawyer

When you start your own small business, you need to ensure you have a good lawyer on retainer. This legal professional will make sure you do not make any wrong decisions that might put you in danger of a lawsuit. A lawyer can help you understand how best to handle a disgruntled customer as well as terminating an employee.

By making a sound investment in a good lawyer, you can save yourself thousands on legal fees. Retain and develop a good relationship with your lawyer so when you require legal advice, they can help. Being prepared with a good lawyer or legal team can help give your small business lawsuit protection.

Keeping Accurate Records

Another good way to give your small business lawsuit protection is to keep accurate records and have contracts in writing. This simple act can make all the difference in how your business is perceived and respected. Having a signed contract on file will aid in any potential disputes, making each party’s right clear should you be sued.

Your attorney will give you advice about what types of contracts you require for general sales, employment, and suppliers. These contracts should put everything about your business in perspective. Apprehending all the critical fine points of every business enterprise you enlist in.

The records you keep should accurately portray all the products and services your business administers. Keep a detailed account of all business transactions. This includes dates of any supply deliveries as well as the prices paid for services. In addition, keeping a record of phone conversations, notes, and emails will back you up in the event of a potential conflict.

You to make sure you and your employees avoid anything that could be a conflict of interest. Make sure you are averting the attention away from any situations which might appear to be one. This can get you in some pretty hot water and create harm to your business’s integrity.

Keep Business Separate from You

Operating your small business as a sole proprietorship can pose some problems legally. You become an easy target in the event someone tries to sue you in a court of law. When you are listed as the business’s sole owner, the person suing you can go after your personal assets. The best advice for small business lawsuit protection is to set up a trust to own the business.

Your business will then be its own legal entity. The business will file taxes, as well as be the principal owner of many financial assets. This is good in the event of a potential lawsuit. If someone sues a business trust, they can only attack the assets within the trust, keeping your home and other personal assets safe.

Another way to protect your small business is to create incorporation. When you incorporate, you are keeping your personal finances independent of the businesses. This is good advice should you lose your business to a lawsuit judgment. Your home and personal assets and finances cannot be touched in the lawsuit. Yet, there is one downside to incorporating. The government requires you to remain apprised of all laws, reports, and tax information it places on a corporation. So this will require additional work in attempting small business law protection.

Have the Right Security in Place

Security is very important when running a small business. Since most of the work is done on the computer, you need to ensure your computer system’s safety is emphasized. To ensure this system is secure, you must have the right antivirus and other software for security installed and activated. If this is not done, your system might not be able to perform certain duties required of it. A virus in the system could potentially damage or destroy important files about the operation of your business. The loss of these imperative files could be the reason for clients or suppliers to bring a lawsuit against you.

To protect your small business in the case of a huge technological breakdown, you need a system of backup files. This backup system may require you to update it on a daily, weekly, or monthly basis. Ensure to inform clients and suppliers that you have one, so they feel confident you won’t lose imperative files. These files need to be stored away in a fire-proof safe; particularly, if you keep them in the business. To ensure the ultimate safety and security, backup files should be stored off-site. This will safeguard these files in the event the unthinkable occurs.

Will your small business endure a disaster such as a fire, hurricane, or even a pandemic? If not, your company’s contractual obligation and legal agreements might fail to placate clients and/or suppliers. Not being able to do this could be grounds for a lawsuit.

The installation of a business security camera system will aid you in keeping your business secure. In addition, you might want to set up substitute sites where employees can do their work. Invest in a portable generator (for power outages), and call trees. Allowing your employees remote work access will also permit the business to function as it normally does. These are good ideas to implement when an outside force has thrown your small business a curveball. Also, excellent methods for small business lawsuit protection.

Make Sure there are No Hazards for Employees or Customers

An important tip for small business lawsuit protection is to ensure you provide both employees and customers with a safe environment. The key to a profitable business is the recognition of a healthy workforce. A business must ensure their workers’ health and safety are prioritized. From the top executives all the way down to the newest hire added to the payroll.

As an employer, if you ensure your employees are safe and healthy, they will be able to continue doing their job. As long as they can work, they can continue paying their bills. Getting hurt on the job results in a lack of funds. Which will result in harassing calls by a debt collection agency. Therefore, for the financial, physical, and mental health, it is wise to keep the work area safe.

In an attempt to keep your work location safe for clients and suppliers, you might need to hire a renovation service. Another way to ensure a safe work location is to construct new fencing around your work location. You can hire a professional fencing company to do this. All doors in your business should be inspected to be functioning properly. One way a lot of employees or customers are injured is a faulty door. A commercial door company can come in and repair or replace the doors.

You are taking steps for your small business lawsuit protection by ensuring a safe and healthy work location.

Planning for the Worst

When starting a small business, a person always hopes everything will work out for the best. Yet, life happens, and sometimes it doesn’t leave good results.

Many things can happen that may affect your small business negatively. Fire, flood, even illness can cause a business to lose momentum or even fail. If the owners of a small business are married and suddenly separate, they will need divorce attorneys.

One of the best ways to plan for the worst-case scenario is by seeking the assistance of an estate planning attorney.

Some businesses call a BCP a “Disaster Recovery Plan.” This plan allows a business to act proactively, putting together an effective plan for recovery. Having a BCP in effect can be the difference between success or failure for a business.

Why would a business need a BCP? A BCP is needed if a business has suffered any potential loss. This loss could be a cyber attack, crashed hard drive, fire, flood, or even a legal dispute such as a lawsuit. Also, the serious illness of a beneficial employee or a disruption in supplies could result in business dysfunction. We realize that thinking about worst-case scenarios isn’t your favorite task, but it’s something that must be done.

In concluding these tips for small business lawsuit protection, we want to add the importance of a BCP–Business Continuity Plan. A lot of the small businesses are too dependent on their insurance policy. Although insurance policies aid in retaining lost finances, they cannot assist in navigating the business logistics following a loss. A BCP is advantageous in the advancement of organizational responsiveness. It also decreases any amount of confusion and allows for decisions to be clearer during a crisis.

Once you have a BCP set up, you need to test its effectiveness, ensuring that the actions you have in place for an emergency situation are feasible. When you practice your BCP, do it similarly to how you would do a fire or earthquake drill. You need a key staff member doing a table-top simulation of what will occur in the event of said emergency.

Sometimes, no matter what precautions you take, you cannot advertise being involved in a small business lawsuit. However, by following these tips, coupled with a successful BCP, you can guard your small business and survive a lawsuit.

Leave a Reply

Your email address will not be published. Required fields are marked *

Follow by Email