How To Protect Your Business From Liabilities
Business litigations and lawsuits are something most business owners face at one point or another. That is why most entrepreneurs believe that business litigations are inevitable and there is no sure way to avoid them. This is not necessarily true. With correct measures and an effective contingency strategy, it is possible to protect your business from lawsuits.
Payouts from legal claims can bankrupt even large businesses. They also harm your company’s reputation and credibility. It is important for every responsible industrialist to protect his/her trade from litigations to avoid the unnecessary expenditure in legal fees and the long hours required for settlements.
Here are a few tips to protect your business from lawsuits:
Engage a good business attorney
Be it a small business or big, engaging a great business lawyer is the first thing you should do before you start your business. A good business lawyer not only helps you understand the legal aspects of your trade, they give you the financial independence of holding your own personal business. The credibility of your business also increases once you get a professional law firm involved that can lend it recognition and clarity.
Clarify your business entity
It’s crucial to separate your personal assets from your business resources. If you are a registered sole proprietorship functioning as a limited liability partnership, you can risk losing your personal assets during litigation. Depending on the type of business entity your company is registered as the liability coverage differs. Conflict in the operational and catalogued business structure of your company can jeopardise your liability coverage.
Obtain liability coverage
The government of Canada provides a detailed list of liability coverage plans that you can avail of, depending on your business model and requirement. From insuring your intellectual property to aiding in emergency and disaster planning, carefully select the policies those are ideally suited to your business. It is also important to consult your corporate counsel to direct you through the process and help you choose the correct plan.
Protection against hacking
With most of the operations and their storage moving to electronic devices, Cyber security is of paramount importance for businesses today. Liability coverage for internet and software applications is key to protect your employees’ and client’s confidential data. For e-commerce businesses, cyber security is crucial to protect your customers’ credit card, debit card and online banking information.
Certain standard preventive measures such as encrypting your data to provide protection against hacking and taking multiple backups in case of a technological breakdown facilitate evading litigations in the future.
Protection against damages
Your liability coverage not only protects your personal assets but also insures damages against loss or damage of private property. Accidents at workplace due to negligence in the maintenance of infrastructure or injuries due to work related causes are also covered by your liability coverage. Therefore, defaulting on your liability policy payments can cost your business heavily.
These are some preventive measures that a go long way in avoiding business litigations. Other than these, small measures such as putting appropriate warning signs at risky places in the workplace, taking care of your employees and their well-being, conducting business practices with the highest standard of ethics aid in preventing unnecessary lawsuits.
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