Are you wondering how to legally protect your business from lawsuits, license suspensions, and legal headaches? Learn more about protecting your business from these common legal issues with this quick guide to keeping your business free of legal troubles.
1. Properly Structure Your Business
Do some research into the pros and cons of various business structures and choose the option that does the most to protect your business from liability claims. Many small businesses choose to organize as a Limited Liability Company or LLC, but they can also be a legal partnership, a sole proprietorship, or a corporation.
Each type of organization has different business protection and personal liability concerns. If you are running a business for profit and have not filed with your state as an organized business, you may have tax issues and might be held personally liable for any claims related to your work. There is no reason to run this risk when you can register your business operation online.
2. Understand the Laws that Apply to Your Business
You can avoid many legal issues for your business by researching the federal, state, and local laws that apply to your type of operation. Many products and services are regulated at the state level, and you will need to have all the necessary licenses, certifications, and required business insurance to operate within the law.
Federal guidelines might require you to evaluate your hiring practices and building accessibility. With a good awareness of the laws that apply to your business, and by having all of your required documents in order, you can limit your risks and recover more easily from a complaint, accident, or lawsuit involving a customer or client.
3. Keep Business Agreements in Writing
Verbal agreements can be very difficult to clarify later and are challenging to defend in court as time goes by. There is no substitute for a written agreement if there is ever a dispute involving your business. Protect your company by using business contracts for your customers that outline your mutual responsibilities and how disputes will be settled.
Also keep good records of contracts and agreements your business enters into, including purchase orders, service contracts, subcontractor agreements, and invoices. Read the fine print before you sign any agreements on behalf of your business and keep your written records in a safe place, and you can avoid legal disputes for the long term.
4. Obtain and Maintain Appropriate Insurance Coverage
Many states require business owners to purchase commercial insurance policies, but even if your state does not, it is still an important part of protecting your business. Business insurance can cover you for inventory losses, slip and fall accidents, equipment failure, and even loss of income. Depending on the size of your business, you may also need to purchase workers’ compensation insurance for your employees.
Having an appropriate level of business insurance can help you weather the unexpected events that can devastate a small business. Your insurance company will work on your behalf to disprove baseless claims against you and negotiate fair settlements if your business is liable for damages.
5. Eliminate Sources of Accidents or Injuries
Maintaining your business property to help prevent accidents and injuries is your duty as a business owner. Not only are you responsible for providing safe products and services, but your business property must be kept free of conditions that could cause a customer or visitor to be injured.
Slip and fall accidents are one example, but there are many others. Your insurance company can help you identify risks and install safeguards that ultimately protect your business reputation and the safety of your guests.
6. Keep Private Information Protected
Educate yourself and your employees on how to handle customer and business information of a sensitive nature. Depending on the type of business you run, this might be limited to payment information and personal data, but it could also extend to treatment records or other confidential information you obtain about your customers.
7. Protect Your Intellectual Property
Just like the physical property your business owns, your intellectual property has great value. Working to build a business reputation and brand name increases your business value, but if you do not register your business name, trademarks, patents, or trade secrets, then they might be used by someone else, which dilutes or destroys the value of your intellectual property.
Doing your due diligence in researching intellectual property rights and requirements will also help you avoid using another company’s registered name, trademark, or process. If you do find that your brand or trademark is already registered, you might find yourself defending against a lawsuit, or even being forced to close down or re-brand your business.
Learn More About Legal Protection for Your Business
You can keep all your business licenses up to date and stay in good legal standing with online document submission from FastFilings. You can file for the first time or renew a sales tax license, sales permit, or certificate of good standing with our authorized online filing service and avoid complex state portal systems. Register your business today and stay out of legal trouble with FastFilings!