Starting a new business can be a very exciting venture for anyone. However, with every business type there are risks involved that should be properly prepared for. As the owner of any business, it is important to do whatever you can to minimize the potential risks in an effort to keep the business operating effectively. Sure, you hope that you can appeal to all of your clients or customers and never have to deal with lawsuits. The reality of it is that anything can happen, and the best line of defense is to be prepared.
If you’re not sure of where to begin, you’ll find these four bits of advice beneficial.
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1. Separate Yourself From the Business
According to an article in Fox Business, one of the most common mistakes that new business owners make is failing to properly incorporate their business. Naturally, entrepreneurs will classify themselves as sole proprietors. However, what most entrepreneurs don’t understand is that should the company get sued, the owner’s personal assets are considered for compensation.
To prevent this from happening to you or at the very least, to minimize the potential risk to the owner’s assets would be to consider incorporating your business. This in turn separates the company’s finances from the owner’s.
2. Understand the Law as it Pertains to Your Business
There are a plethora of rules and regulations that the local and federal government put into place for businesses to follow. From tax laws to employee laws, making sure that you’re fully aware of these laws and abiding by them is of the utmost importance. Because most new business owners are unaware of every law as it pertains to their industry, it may be ideal to consider hiring an attorney. Interviewing attorneys at the start of your business is the best way to be proactive.
Attorneys are knowledgeable in business law and will ensure that your organization stays in compliance with all rules and regulations as they come about. Attorneys can review all contracts to ensure that you’ve accurately protected your company, and ensure that all legal paperwork is in order. Having an attorney is also beneficial in that they can also represent your company in the event of a lawsuit.
3. Insure Your Business
There are business insurance policies available for just about any type of risk your business could be up against. Whether business insurance is mandatory for your industry or not, it is certainly worth the consideration and investment. Reviewing the potential business risks and evaluating the various types of policies can help you make the best decision. Below are some of the more common types of insurance to consider:
· General liability insurance – General liability insurance is typically purchased as a means for covering any legal issues that result from claims of negligence. Such policies can protect your organization against payouts that result from property damage, physical injuries, damages to property, medical compensation, settlements, and the overall costs of legal fees. This is the most basic form of business insurance. To get the best value, seek out a general liability insurance quote from various providers and then compare rates.
· Product liability insurance – If you’re in a business that distributes, manufactures, wholesales, or retails a product of any kind you are legally liable for that product’s safety. Having product liability insurance, however will protect your company from any financial loss that resulted from the product being defective or causing physical harm to a client or customer.
· Professional liability insurance – If your business provides services of any kind, you may want to consider professional liability insurance also referred to as errors and omissions insurance. Such coverage protects your business from errors, negligence in services and malpractice claims.
· Commercial property insurance – much like homeowner’s insurance, commercial property insurance provides financial coverage in the event that the property is lost or damaged as a result of events such as fire, natural disasters, or vandalism. This does not only cover the physical commercial building, but it also covers anything that may include loss income and interruption in business, and office appliances.
4. Protect Company & Client Information
As more businesses operate with the use of computers and the internet, the potential risks have increased. Ensuring that you have all the elements in place to protect private and confidential information is beneficial to prevent lawsuits. At the very least, you should have up to date antivirus and security software on all business computers and mobile devices.
In the event that something should go wrong with your network or data, having backup files to refer to is extremely important. Working with an IT support agency is ideal to determining the best methods for backing up your files. It may also be beneficial to store important files offsite (physical files) this way should a fire or natural disaster occur, and your files become damaged, you still have a backup for use.
The bottom line is that business owners have a huge responsibility. Protecting your company against the potential risks of lawsuits should be a top priority. By separating yourself from the business, having a full understanding of the laws as they pertain to your industry, investing in the appropriate insurances, and protecting company and client information, you are one step closer to safeguarding the very thing you’ve worked so hard to accomplish – your business. Don’t wait until something goes wrong to put these protections in place, begin investing in the safety of your business now.
At the very least, you should have up to date antivirus and security software on all business computers and mobile devices. Read the Scanguard review to learn more about how this software can protect you and your company. You can read other reviews about antivirus software before making a purchase
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