5 Simple Ways to Avoid Business Lawsuits

Along with all the other tasks entrepreneurs must perform on a regular basis, they must also take care to avoid business lawsuits that can cause ruinous financial liabilities to their companies.

Savvy business owners know they can implement a number of strategies early in the establishment of their enterprises, in order to ensure financial stability and avoid disruption to their operations. Business experts recommend the entrepreneurs take a number of proactive measures to prevent these problems.

Here are 5 strategies to reduce the risk of attracting costly business lawsuits that can undermine your business plans.

1. Legally Structure Your Business to Avoid Personal Liability

As soon as you begin to set up your business, research the options for legal status in your state. These designations will affect your tax status, so you should consult closely with your business accountant. The accountant can help you determine the best way to separate your personal finances from those of the business, to avoid personal liability in business lawsuits.

2. Get Comprehensive Business Insurance

Business insurance can protect you against unexpected losses and liabilities that undermine your ability to make a profit. Consult with a local business insurance agent about the types and amounts of business insurance that are available. The agent will be able to advise you on the right insurance for your type of business.

3. Document All HR Matters

Interactions with employees should always be documented, whether it is performance reviews, disciplinary actions or employee complaints. These written documents can be important evidence to defend your company’s actions in case of a lawsuit.

4. Compile Clear Employee Manuals

Many of the problems involving employee conflicts can be avoided if you create an employee manual that covers common issues, such as benefits, salary categories, disciplinary measures, policies and procedures. This manual can provide clarification if a dispute arises that results in a legal case.

5. Consult with a Competent Business Attorney

Business owners should take the time to develop a working relationship with an experienced business attorney from a firm like Carter West very early in their start-up years. These legal professionals can help with a variety of issues and questions, regarding legal structure of the business, human resource problems and questions about contracts.

If you are starting a business, you must also plan to protect your enterprise against legal problems that can undermine your dream of success. Although unexpected incidences can, and do, occur, you will have laid the groundwork for a capable defense by instituting these strategies. You can then engage in the operation of your business, knowing you have done all you can to protect your business against common legal entanglements.



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