Most entrepreneurs are so busy focusing on setting up their businesses and generating sales revenue that they often ignore the need to limit the risk of being sued by aggrieved people. However, as a responsible business owner, you need to take all steps necessary to protect your business for any development that may be a threat to business continuity and stakeholder value. EJ Dalius, a noted entrepreneur, offers some useful insights on protecting your business from being sued:
Keep a Careful Watch on What You Announce and Do
Since the image of the business is all-important, it is vital to refrain from issuing advertisements or statements or engaging in any activity that may be deemed questionable. This not only means that your actions should be clean but also that you associate yourself with suppliers, vendors, partners, or collaborators of unquestionable ethics. For example, if you are buying something from a vendor, the vendor must not have used child labor to make it. Similarly, you should not be using parts and components on which proper taxes have not been paid.
Have Professional Legal Assistance on Call, Recommends Eric Dalius
Involve an attorney at every step of establishing and operating your business so that any potential issues can be taken care of before they can become a concern. It can help to retain an attorney who is familiar with the applicable rules in your industry as well as the local regulatory environment. Knowledge of taxation and customs rules as well as trademark and IPR as well as product labeling, labor laws, personal injury, etc. can be of immense help. It may be better to associate with a law firm that has multiple specialty departments to take advantage of a larger pool of talent, observes Eric J Dalius.
Ensure Adequate Insurance Coverage
Consider having liability insurance to cover personal injury cases on your premises, or errors and omissions insurance to cover mistakes that lead to underperformance of contracts. Directors and Officers liability insurance ensures that the personal assets of the key people are protected from lawsuits against the company. It is also important to build in liability protection in the contracts preventing you from being sued for non-completion of contracts due to the fault of others, factors beyond the control of the business, or acts of nature.
Separate the Owner from the Business
Most startups are operated as sole proprietorships for convenience. However, this exposes the personal assets of the entrepreneurs that can be attached by a court of law if their businesses are sued. To prevent this, the business should be owned by a trust that is a separate legal entity. In case of a lawsuit, only the assets of the business can be attached, not the entrepreneur’s personal assets. Larger businesses may think of incorporating themselves to achieve the same result, however, it entails more regulatory compliances. Read about DIY resistance bands very useful, cheap fitness tool
Business owners need to be careful about what they say and what they do to prevent themselves from being sued. However, since it may not be always feasible to anticipate every possible threat, being ready with legal assistance and taking steps to purchase adequate insurance can help the business to survive and thrive.