Building a small business from the ground up can be a rewarding process. After devoting countless hours and resources to your endeavor, a lawsuit is the last thing you want. Unfortunately, the reality is that at some point or another, most businesses are sued. The good news is that you can take steps to safeguard your enterprise from legal action. Here are 5 ways to protect your small business from being sued.
How to Protect Your Small Business from Being Sued
Over 75% of small business owners are concerned that they’ll be sued or that someone will threaten to sue them. Although there is no way to guarantee that your small business won’t be sued, as an owner, there is a lot you can do to help minimize risk. Here are some of the actions your can take to protect your small business:
Work with Experienced Small Business Attorney
Running a business involves numerous legal areas, and you want to make certain you have the guidance you need to comply with all applicable laws and protect what you have built. The best way to help insulate your business from suit is by working with an experienced Florida small business attorney. Having the advice of an experienced lawyer can assist you in identifying risks and taking preventative action.
All too often, small business owners wait until they have been served with a lawsuit before contacting a lawyer. By then, legal action will have already commenced. When you work with an experienced small business attorney beforehand, you can take the steps you need to minimize your exposure to liability.
Get Agreements in Writing and Make Sure They are Valid
Small business operations often depend on contracts and other agreements to function. Certain legal requirements must be met for a contract to be considered legally valid. In Florida, depending on the type of agreement, a contract may be written or unwritten. However, it’s usually better to get most, if not all, contracts in writing. Additionally, some agreements will not be enforceable unless they are in writing. When terms are written, it can help the parties avoid disagreements.
You need to make sure that your small business agreements:
- Are valid, and
- Have been thoughtfully negotiated and accurately drafted.
Having well-constructed contracts can help you avoid litigation. Your small business attorney can help you ensure that your contracts are properly negotiated and drafted in accordance with Florida law.
Keep Your Personal Interests Separate
Depending on your business formation, you may or may not have personal liability for your small business. For example, if you have formed a limited liability partnership (LLP) or company (LLC), your personal assets will not be reachable. All that being said, you still want to ensure that you keep your small business decisions and assets separate from your personal ones.
As a partner, member, or officer, you have a fiduciary duty to the business that includes not putting your personal interests above those of the entity. Lawsuits can happen when a partner’s or member’s personal interest becomes entangled with those that impact the business. Therefore, a good practice is to make sure you are keeping your personal interests separate.
Get Proper Insurance
Operating a small business usually requires investing in insurance. Depending on your structure and industry, there are various types of policies that you may need. You will want to assess your insurance needs and make certain you are properly insured. Having the right policies in place can protect your small business and provide adequate coverage should something happen. In addition, when insurance policies work as intended, they can help reduce the risk of lawsuits.
Keep Accurate Records and Your Word
An important part of running a small business is keeping detailed and accurate records. As an owner, you should develop a consistent and organized system. Being able to access and reference records can help prevent and resolve potential disputes.
Another essential requirement is keeping your word. In business, your reputation is everything. Operating with honesty and integrity will help you with your client, vendor, employee, and other business relationships. In addition, having business practices that are transparent, well documented, and consistent can help you mitigate potential conflict.
Being sued can be a stressful and costly experience that business owners want to avoid. By following these practices and working with an experienced small business lawyer who can help you to identify potential risks and ways to avoid legal action.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.