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How To Protect Your Small Business From Legal Liability

Running a business is always challenging as there is a lot to keep in mind. In addition to ensuring the business hires the right people, has flowing revenue, and remains afloat, a business owner must also think about legal liability. While there are various other types of liabilities (accounting liabilities, for example), this article will focus on legal liabilities and how to protect your business from them.

Legal Liability

Get Insurance

Depending on your business and where you operate, you may be required by law to have different types of insurance. Commonly, you are expected to provide coverage for customers and employees, but it is also essential to protect the business itself. In addition, of course, you can protect the business against damage, vandalism, and the like. Still, these issues do not present a significant legal challenge as issues brought forward by employees and customers.

If a customer makes a complaint against your business or brings a lawsuit, you might be looking at offenses that range from errors and omissions to personal injury claims. For employers, you need to protect the business from employee-related issues such as wrongful termination and harassment suits. But, most importantly, you need to protect the business from liabilities associated with injuries, illness, and fatalities.

If your business faces a lawsuit from an injured or ill employee or their family, you might be held liable and required to pay all legal costs, damages, and compensation. This can devastate the business. Instead, get workers comp insurance to pay for the legal costs to protect it. When you get workers comp insurance, you ensure your employees have the benefits they need if they fall ill or get injured while protecting your business from legal liability.

Retain a Business Lawyer

A business attorney is vital because you need them when setting up the business as well as when operating the business. When setting up, they will ensure you are registered as the correct business entity, help set up contracts and bank accounts, file the correct documentation with the proper authority, and help with everything else needed to start the business.

Legal Liability

Once the business gets going, having an attorney on retainer can help if a suit is brought against the business. While insurance is meant to protect against these, you might have overlooked a specific type of insurance and thus need an attorney to represent you during a suit.

A business attorney should also be contacted if there are significant changes to the business. For example, adding new locations, mergers, and expansions will require the expertise of an experienced lawyer.

Don’t Lose Liability Insurance

Having liability insurance is great for the reasons outlined above and what many people do not know is that they can lose it. A common reason is operating as the wrong business entity. For example, you might be seeking liability insurance for a partnership but are listed as a limited liability company. Insurance companies do not like this, and you might end up losing your insurance and be left with no liability and legal protection.

Legal liability is a serious issue and one that every business owner should always keep in mind. While there is little one can do to stop a determined person from suing a business, there are things business owners can do to protect their businesses, namely getting the correct type of insurance and hiring a lawyer.