Regulations and legal issues can spell doom for a business regardless of its size. However, even a minor legal issue could severely damage the financial health of a small business. If you run a business that operates from home or employs only a handful of people, you probably need to protect your business from litigation.
Here’s what you can do to make sure a legal challenge never disrupts your business:
1. Structure your business right
Small business owners often make the mistake of registering as a sole proprietorship. The legal status of your business is crucial, and it’s important to separate your personal life from your business operations. Register a limited liability partnership or a private company to limit the risk of legal action spilling over into your personal life.
2. Apply for short term financing
Financial service companies like Cash Stop can offer you a cash advance which could help you keep the business afloat while you deal with pending litigation. An infusion of short-term cash will help you manage the business’ finances and fill in the gaps while resources are diverted towards your legal defense.
3. Hire the right attorney
There’s two things you need to consider while hiring a lawyer – experience and relevance. Hire a tax lawyer if you’re expecting action from the tax authorities or hire someone with years of experience in workplace lawsuits if you’re expecting legal action from employees. The more relevant experience your attorney has, the more expensive her time is likely to be. But a few minutes with a competent lawyer could save you thousands of dollars in legal fees and damages.
4. Be transparent
Keep all your communications clear and concise. If you can’t meet a deadline or fail to honor the terms of an agreement, you can avoid a potential lawsuit by simply being open and honest with your stakeholders. Talk to your suppliers, clients, and partners regularly and make sure you have evidence to show you made efforts to resolve a potentially volatile issue.
5. Secure business data
Data security should be the top priority for all businesses, regardless of size. As a small business owner, you probably keep all your files on the cloud or on your personal computer. Make sure you’ve picked the right service provider and installed adequate cybersecurity software to keep all the files safe. Your customers and employees expect you to protect their data and the easiest way to avoid legal issues is to be precautionary with the critical personal and financial information your business handles.
There’s no doubt your company will be exposed to legal threats and potential lawsuits in the course of business. By taking some precautionary steps, reading up on your responsibilities as a business owner, getting insurance, and hiring the right professionals, you can reduce this risk drastically and help your business thrive.
Note: This article is not legal advice. Please contact a lawyer if you require legal consultation.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.