As an entrepreneur or business person, the last thing you want is you or your business getting entangled in a lawsuit. You do everything to limit the risk of disputes that disrupt your business operations and incur huge legal costs. There are several safeguards you can use to protect your business from legal disputes.
Always make sure that you and your employees avoid making inflammatory statements that can attract lawsuits. Advise your employees to avoid making slanderous or libelous statements in private and public settings. Avoid engaging in activities that may create a conflict of interest.
Such activities can harm your integrity as an individual or a brand and increase the risk of lawsuits. For instance, if you are a member of a municipal council, avoid sitting in a committee that passes laws that benefit your business.
Further, avoid dealing with people of questionable character. Do not engage in business with people who have a history of cutting corners or engaging in unscrupulous businesses. Even if your actions are above board, the association could stain your image and lead to lawsuits or loss of customers.
Turn the Business into A Legal Entity
If you are the sole owner or have partners, find ways of separating your private property from the business property. This will save you problems when your business is sued because your private property won’t be used to cover the cost of the lawsuit or compensate the claimant.
One way of protecting your assets is to register your business under a trust. A trust is a legal body that can own properties and other assets and files tax returns independent of the owners. If a business owned by a trust is sued, the court can only attach properties owned by the trust in the lawsuit.
Another way of protecting private property is to incorporate your business. The law considers corporations to be legal persons that can be sued independently. When a corporation is sued, only the property registered under the entity is attached by the court. This protects your private properties and personal belongings from being used to cover the costs of the suit.
Insure Your Business
You should insure your business against the most common liabilities in your sector. For instance, if it is a medical practice, you should insure against medical malpractice. You should also insure against some of the most common suits leveled against employers. Most businesses have liability insurance that covers common suits such as claims resulting from workplace accidents.
Protect Your Data
Modern businesses rely on data stored in servers to run their operations. That is why it is so important to protect your data from security breaches. Make sure you have reliable firewalls and anti-virus software to protect sensitive files and customer data from infiltration by hackers.
You should also train your employees on data protection and introduce protocols to prevent intruders from accessing company data. Make sure that you have backups files stored safely by a reliable cloud service provider. Securing your data will also allow you to continue operations during major disruptions, such as natural disasters.
Protect Proprietary Information
To protect proprietary business information, apply for patents, trademarks, and copyrights. This will prevent employees or contractors from claiming ownership of ideas, processes, or concepts that are invented within your business premises.
Further, sign nondisclosure agreements with employees and contractors who leave your company so that they will not use proprietary information stolen from your premises to start new ventures that compete with you. Confidentiality agreements also prevent former workers from joining rivals.
Understand Employment Laws
Most of the legal disputes firms have with employees revolve around compensation and discrimination. That is why you should take time to understand compensation laws related to wages and hourly rates. You should study overtime laws and ensure fair compensation for employees who work for more than 40 hours a week.
Further, take time to understand discrimination laws related to age, race, creed, sexual orientation, disability, and medical condition. Due to the complexity of these laws, it is advisable to hire an employment law firm to audit or review your employment practices.
Hire an Attorney
You should engage an employment lawyer who will advise you on important business undertakings, such as hiring workers, writing contracts, and undertaking major operations. The attorney will direct you on the steps to take when you have disputes with former employees or contractors. Good lawyers will also advise you on tax compliance and provide legal counsel if you have disputes with the Internal Revenue Service (IRS).
Businesses are exposed to all manner of legal risks, some of which can incur heavy legal penalties. That is why it is important to separate your business interests from private possessions. It also helps to understand all the different types of risks that your business faces and take necessary measures to protect it. Lastly, engage a competent lawyer who will advise you and provide legal counsel.