Being involved in a lawsuit is a common part of owning a business, but it’s not a desirable aspect. Many business owners take great strides to ensure that they will not be the target of a lawsuit, but sometimes it happens anyway. Lawsuits happen for a variety of reasons, including some that are out of your control as the business owner. However, by paying attention to detail and controlling what you can, your chances of being sued can be minimized.


Disconnect yourself from your business

Business owners can see their business as an extension of themselves, but being too connected with your business can put you at risk of being liable in the event of a lawsuit. posted a blog titled, “5 Tips to Prevent and Prepare for a Business Lawsuit” that outlines why operating as a sole proprietor could backfire. “But make sure that, legally at least, your business is a separate entity from you, the individual. Do not run your business as a sole proprietorship, or you will find yourself personally liable should you get sued.” Before you establish your business, meet with a legal professional to learn what might happen in the event of a lawsuit.


Protect yourself

Consulting with a lawyer before making major business decisions can save you in the long run. Asking for assistance with contracts, insurance coverage, conflicts of interest and similar legal issues will help you understand their potential ramifications for your business. It’s also important to make sure you’re covered. An article titled “Don’t Get Sued: 5 Tips to Protect Your Small Business” by Glenn Curtis emphasizes the importance of carrying insurance. “All businesses should obtain liability insurance in case (for example), a customer was to slip and fall in your place of business. Certain professionals, such as insurance agents and/or consultants, should also consider obtaining errors and omissions coverage to ensure the business should a customer or client accuse the owner of making some sort of error or not living up to a contract.” It is also important to remember that your employees represent your business, so be clear in training, policies and communications, so employees don’t make mistakes that could land you in court.

Properly establishing your business from the start goes a long way toward preventing lawsuits. Seeking professional help to review and draft contracts, employee policies and more can give you added protection. Carrying insurance can also help to ensure that your business won’t be financially ruined in the event that you do end up in court.



This article was written by Alaina Brandenburger for Small Business Pulse


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