How to Legally Protect Your Business
Today, on Redhead Mom, I’m sharing a partnered guest post about How to Legally Protect Your Business.
When you have a business, it can seem like a part of your identity. You work so hard to build your business, and you often sacrifice along the way.
Then, what if something were to happen that not only legally threatened your business but perhaps your personal assets as well?
This is all-too-common. For example, if you weren’t legally protected and someone were to slip and fall on your business premises, what would you do?
The following are some general things to know about legally protecting not just your business but yourself and your personal assets.
A big part of protecting your business relies on understanding the threats, one of which relates to premises liability.
Premises liability law is meant to protect your vendors and customers when they’re on your business property. Workers’ compensation typically protects you against employer claims.
Premises liability means that you’re responsible for the safety of anyone who enters your business, even if you don’t own the property.
Slip-and-falls are one of the most common accidents that lead to premises liability lawsuits.
The best thing to do to legally protect yourself is to first have a safe, well-maintained business that’s free of hazards and a well-trained staff.
You should also have general liability insurance.
Any business that engages the public in any way should have general liability insurance.
A general liability policy will help provide coverage for certain damages if someone is hurt and may also cover the cost you incur to defend against these claims.
General Business Insurance
Business insurance is somewhat of a broad term, and along with protecting you against property damage, it can give you a level of protection against lawsuits, theft, vandalism, and even loss of income.
There are different types of business insurance. Workers’ compensation is one, but there’s also commercial liability, commercial property, and commercial auto. The minimum you should have is property and liability coverage, and if you have employees it may be state law that you carry workers’ compensation coverage.
Liability coverage protects against claims that were briefly touched on above, such as bodily injury but also advertising injury, errors or omissions, and property damage.
Property policies protect if there’s damage from fires, storms, theft or other covered events.
Keep Your Business and Personal Finances Entirely Separate
While you may not be able to avoid some losses directed at your business, you should make sure you have business and personal finances completely separate from one another to protect yourself.
There are quite a few steps to do this. You’ll want to get an Employer Identification Number or EIN first.
This is a nine-digit number from the IRS that you’ll use for business tax returns, establishing your business entity, and opening a bank account.
You’ll then need to establish an entity, such as an LLC, and from there, open a business account.
Start to build your business credit history separate from your own with a business-only credit card, and pay yourself out of your business account, rather than taking money when you need it from the business.
Add Legal Documents and Disclaimers on Your Website
If you have a website, and especially if you’re an online-only business, you want to make sure you have legal documents clearly displayed on your site.
The following are a few other things to keep in mind as far as legally protecting your business:
- Have formal employee agreements regarding everything from the scope of employment to intellectual property.
- Have not just employees but vendors and contractors sign confidentiality agreements.
- Protect your brand with trademarks, copyrights, and patents when appropriate.
- In general, use contracts any time you’re going to enter into a business relationship so that you can not just have in writing what you both agree to, but you’ll also have a paper trail that you can refer to when needed.
- Keep all of your paperwork updated and organized because if you do run into a legal situation you may need it.
- Do your research in every area related to running your business. For example, misleading advertising can lead to legal action, so know what the standards are.
When you protect your business, you’re also protecting yourself and your family, so it’s important that you’re thorough.[wl_faceted_search]