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How do you protect your business?

Discussion in 'Legal Aspects of Running a Business' started by ruener79, Apr 1, 2016.

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  1. ruener79

    ruener79 Member

    Every business owner must be responsible in protecting his business against possible lawsuits. A lawsuit will not only disrupt your business, but also cost you some money. Some of the tips to protect your business include;
    1) Separating yourself from your business
    2) Hiring a competent attorney
    3) Getting insurance

    In your case, what are the things you've done to protect your business against possible lawsuits or at least limiting risk and liability to ensure business continuity?
    Ladyferoz likes this.
  2. Nancy

    Nancy Member

    I was required to have $1 million in liability insurance for many of the garment decorating contracts I had (like with NHL, etc.). I also had general business insurance to cover inventory, equipment, customer lawsuits, etc. I would be extremely nervous to NOT have sufficient insurance to cover, even though I never have had to use it.

    I spent a little extra cash when I first started in business and consulted and retained an accountant and a lawyer and set my business up based on their recommendations. Each business is unique, so what works for one may not be the best idea for another. As my business grew and changed, I continued to review with them yearly, just in case I needed to change anything.
  3. Lynda

    Lynda Member

    For a lot of the consulting work I do you have to have public liability insurance by law, which protects both the consultant and the clients. If something goes wrong, they know there will be sufficient funds there to fix it.

    Due dilligence on business partners and possible freelancers is also important. One of the professional groups I joined does a free contract review service, which is a very good way to make sure that any suppliers contracts don't have hidden catches and customers can't ask for the moon (e.g. "all rights for lifetime of copyright" had been slipped into one, which was promptly removed).

    It is as well to make sure you have an accountant and a lawyer available, or know where to find a reputable one. There's no way to keep up with all the laws and regulations and run a small business yourself. There just isn't time.
  4. ruener79

    ruener79 Member

    These are great! You really went big on protecting yourself by getting insurance. A lot of people often think of insurance as a waste of money only to regret it when the time comes and they need it. Those who shun insurance forget that the purpose of insurance is 'protection' not investment. Sure, you'll not earn from it, but it will definitely protect you from losing more money when legal issues arise in your business.
    Reviewing them from time to time is really essential as your needs may have changed over time.
  5. ruener79

    ruener79 Member

    Great one on due diligence! Reviewing those contracts are really essential, as there will always be those who will slip a provision or two hoping you'll miss it until it's too late.

    Delegating to professionals might be difficult for some business owners especially those starting out as they might be thinking about the fees. But I agree with you that this is important. Apart from not having enough time, there are those little nuances that only professionals can pick up, and will possibly save you from future troubles.
  6. Nancy

    Nancy Member

    @ruener79 The importance of insurance and legal protection is something I learned from my entrepreneur/inventor father. He had insurance, but didn't stay on top of the details. When a tornado completely blew away his business and he wasn't covered due to a glitch in his coverage, it was a disaster that he never fully recovered from. I worked so hard for my business I wanted it to be safe from loss. I also have children so did not want to risk being sued or losing my home for their sakes'!
  7. ruener79

    ruener79 Member

    @Nancy I'm sorry to hear about happened to your father as regards that glitch in his insurance coverage. Incidents like that, while unfortunate, truly make a good vicarious learning. You really can't get wrong with due diligence. All things will boil down to that, especially when a bad event we think would never happen to us catches up with us.
  8. briannagodess

    briannagodess Member

    The first thing I have done is obtain the proper business permits for my venture. This way, it will be legal and taxed. Although we despise tax, it's the only way to be out of the eye of the authorities. Otherwise, they can close your business and even penalise you for not adhering to the tax regulations. My cousin has connections with the Bureau of Internal Revenue so I was able to obtain the needed permits, got my business number and name and pays tax every year as well.

    Aside from that, I have hired a lawyer so I can know the ins and outs of the business industry. After all, I don't know much about the legalities. I might not know it that I'm already disobeying the laws, so better hire a lawyer that can help me with the legalities.

    Insurance is a must as well. I would also suggest a personal liability if you're into food making or selling anything edible or even poisonous.

    Good luck!

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