If you are a small business owner, you are likely considering ways to make more money to grow your business in 2018. In doing so, you might be evaluating your options and strategizing how to increase your sales and cut overhead. That’s excellent.
However, and often overlooked, there is an additional consideration that should warrant your attention in this effort… limiting your foreseeable legal risks. If you have ever been involved in a lawsuit as either a plaintiff or a defendant, you can appreciate how draining the litigation process can be on you personally and on your checkbook. And, if you have ever been involved in business litigation, you can also appreciate how devastating any lawsuit or claim can be on your ability to conduct a profitable business. What can you do to limit your legal risks?
For starters, you should ensure your business has some type of entity protection, whether in the form of an LLC or corporation. You should also understand and appreciate what is required to create and maintain related limited liability protections to avoid personal liability. If possible, you should avoid personal guarantees and always maintain corporate formalities when you do business.
You should evaluate your current insurance coverages, exclusions, and policy limits. If you don’t have general liability insurance, property insurance, and the like, you should talk to a reputable insurance agent in your area to protect you and your specific business. Having proper insurance coverage can also provide you with an attorney to defend you without additional cost if there is ever a claim brought against you or your business depending on the insured. Review your insurance coverages at least annually to ensure they meet your present and future needs.
Before you start growing your business and throughout your business’s operation, you should ensure that your business contracts, leases, employee and contractor engagements, regulatory compliance, and local, state, and federal licenses and taxes are properly documented and considered. By doing so, you limit risk, maximize your legal position in any given situation, and meet your legal obligations as a business owner and employer.
As you can see, even with a “small business”, there are many ways that growing your business can be successful by limiting your foreseeable legal risks. However, these issues are many and can be complex and warrant professional guidance.