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Tips to help small businesses from being sued

When many people decide to go into business for themselves it is because they are passionate about the type of business they are going into. As a result they may focus on the subject of their business and not think much about the related issues. Some of those related issues that should be considered are those that are legal in nature.

While perhaps not the end of the world when a business faces a lawsuit, it can take a toll on the business financially. This can have a lasting impact and in the worst situations even lead to the business failing. Fortunately there are some steps that if taken might reduce the risk of a lawsuit occurring or in the alternative, lessen the impact of such a case.

The first is to make sure that your business is separated from you legally. While there are multiple ways to do this, one of them is to place the business in a trust. Another is to incorporate your business. These approaches could keep your personal assets, such as your house or automobile, safe should you be sued.

Second, it is a good idea to protect your business’ files. Should files be lost in a computer crash, or stolen, a business may have difficulty completing the work it has promised another party. Security and antivirus software could help with this. In addition, regularly backing up files is advisable.

Being aware of what you do and say could prevent statements deemed to be slanderous or libelous from coming out of your mouth. Likewise, it could also prevent conflicts of interest from occurring. In addition to avoiding lawsuits, steering clear of these situations could also prevent you and your business from getting a bad name.

Liability insurance could help to protect a business as well should it be sued for something such as premises liability. Building protection into the contracts you make with other parties that indicates that you are not liable for work that is not complete as a result of an act of nature, could be a good way to sidestep a lawsuit as well.

Perhaps the best thing the owner of a small business can do to protect his or her business is to work with a business lawyer. In addition to assisting with litigation should it arise, they can help owners to avoid the situations that could prompt such a lawsuit.

Source: Investopedia, “Don't Get Sued: 5 Tips To Protect Your Small Business,” Glenn Curtis, Accessed Nov. 12, 2014

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