How to Protect Yourself and Your Business from Being Sued
Jennifer K. Halford, Esq. in her blog enumerates mistakes commonly made by business owners concerning lawsuits. She gives tips on how to avoid irreparable consequences of lawsuits. A lawsuit is very damaging to the business and may be even to your personal assets. Litigation is costly and time-consuming. Protecting yourself from being sued starts in the beginning when you are setting up your business. It is always recommended to seek the counsel of a lawyer who has experience in the industry that you are involved in. Your lawyer should know the risks and liabilities that go with your business to be able to advise you on the best business structure and insurance policy. Always think ahead about protecting your personal assets and your investment.
A lawsuit can destroy your business. Even if you “win” the lawsuit, you still lose. Litigation is costly. Time is taken away from your business. And there are the emotional costs of a lawsuit.
That is if you “win” the lawsuit.
But what if you don’t “win” in court? What if your business does not have enough capital to pay the judgment? Your personal assets can be taken to pay the judgment unless you have taken steps to protect yourself.
Take action now to protect yourself. Don’t make these common mistakes:
1. Picking the wrong business structure: Sole proprietors and partners are personally liable for the business’ debts. Shield yourself from personal liability by changing your business to a corporation or LLC.
2. Picking the wrong insurance policy: Too many business owners choose a cheaper insurance policy to save money. Or worse, they choose not to get insurance at all.
Most fail to realize their mistake until they get sued. That is when they realize their policy does not cover their loss.
Invest in a good insurance policy that is tailored to your business. Make sure it adequately covers the risks commonly associated with your industry. It will be worth the extra cost if you ever need to use it.
3. Picking the wrong business attorney: A good attorney will help your business succeed. A bad attorney will cost you time and money.
Find an attorney who knows your business. The attorney should be familiar with the industry’s risks and liabilities. Talk with her about which business structure is best. She can also draft contracts and policies that limit your exposure to getting sued.
Ensure your personal assets are safe. Take action now to protect yourself before your business gets sued.
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