10 Ways to Bulletproof Your Small Business Against Legal Surprises

Did you know that approximately 36 – 53 percent of small businesses are sued yearly for various reasons? Therefore, it’s no surprise that 43 percent of small businesses are currently facing litigation.

This means that there is a fairly big chance that your business could be sued.

How can you protect yourself from legal surprises that will cost your time, money, and reputation?

Here are ten ways to protect your business against costly legal claims.

1. Insist on working with contracts and keep up-to-date records

Whenever you come to an agreement with a business partner, employee, or customer, make sure you put everything on paper with the help of a qualified lawyer.

This applies to employment contracts, non-disclosure agreements (NDAs), tax documents, articles of incorporation, and transcripts of audio conversations with business partners.

File these legal papers and financial records securely and keep them current.

Additionally, store digital copies in a flash drive or cloud storage for backup in case the hard copies get lost or are damaged.

These legal contracts and documents will protect you from unnecessary disputes.

Also, make sure you work with professionals who know the law and can protect you. For example;

  • An attorney can help you to formalize any business agreement with your partner, employees, or suppliers
  • A certified accountant will help you keep financial records of your dealings in order
  • A human resource expert will guide you on the rights of employees and how to keep them happy in the workplace

2. Be straightforward in your business dealings

You will avoid unnecessary lawsuits if you are straightforward in your business dealings.

Avoid bending the rules by strictly following business regulations, delivering what you agreed in contracts, and shunning misrepresentation.

This will create a respectable reputation for your business, establish customer and employee loyalty, and increase your profits.

Clearly specify what you want from your employees, customers, suppliers, and business partners, preferably in writing. This will prevent misunderstandings and mistakes that can lead to dreaded court cases.

3. Adhere to sound employment practices

There are federal and state laws for workplaces that you should adhere to in your business.

Some examples are laws against discrimination, workplace harassment, safety regulations, and wage laws.

You must create a code of ethics that will guide you and your employees.

Engage your employees in creating the code of ethics that will govern how they work and relate with you, each other, and with external parties. Lead by example, and they will adhere to the rules.

It is also essential that you train employees on your company’s work ethics through induction workshops regularly. In this manner, you will create an incorruptible team that is unlikely to engage in practices that are unlawful or unethical.

4. Create and enforce business policies that keep you legally compliant

You can also create additional policies for your business to further protect yourself against lawsuits.

These are tailor-made policies unique to your business based on your daily practices.

For example, setting up rules that;

  • Prevent workplace accidents such as mandatory use of safety equipment
  • Stop occurrences of harassment, such as by insisting on a proper dress code
  • Avoid complaints about products or services by having quality standards that should be observed at all times

5. Hire a competent company lawyer

It’s essential to have a reputable business lawyer to handle all the legal aspects of your business.

Keeping an experienced lawyer on a permanent retainer who will proactively guard your business against unexpected lawsuits will save you from surprise legal cases.

If you are looking for a law firm in New Jersey, you can’t go wrong with the experienced team at Aiello Harris.

The business lawyer you hire should;

  • Have a reputation for handling legal issues associated with your type of business, such as property damage lawsuits and copyright infringement issues
  • Have the expertise to help you comply with the laws necessary to run your business in your state
  • Be registered with reputable legal associations such as the American Bar Association (ABA), local chamber of commerce, and your State Bar Association
  • Have an upstanding reputation among fellow business owners, customers, business advocacy groups, and associations in your area

6. Separate your business issues from personal ones

You cannot mix business with pleasure and prosper. Therefore, do not use your business earnings to fund your personal lifestyle.

Allowing your friends and family to overrun your business is also a bad practice.

So, create a solid employee structure with professionals in every position to handle your business deals and customers.

Avoid mixing your personal tax with your business tax and vice versa; these things should be handled separately to keep your records straight.

If you partner with others in business, do not mix business with personal issues to avoid unnecessary disputes.

7. Adequately insure your business against risks

Business insurance is essential to protect your business against the losses you may face from lawsuits.

Some examples are employee workplace injuries, property damage due to negligence, auto accidents due to reckless driving, and client lawsuits resulting from unsatisfactory deals.

Approach a certified business insurance agent for advice on how to insure your business against losses that can arise from such events.

For instance, you can get professional liability insurance, directors and officer’s liability insurance, and worker’s compensation insurance.

If a claim is forwarded against your business, notify your insurance provider immediately.

The earlier you report an incident likely to lead to insurance liability, the faster you can resolve any legal entanglements surrounding it.

8. Guard your business brand and image

Your business reputation is built through the actions you portray to your clients, employees and community. Your reputation is built through words, actions, and the products and services you provide.

Avoid making public announcements or performing actions that annoy your customers and shareholders.

Do not do business with unscrupulous individuals because their reputation will rub off on your business and affect your profits.

Adapt business ethics that align with local laws and regulations, morals and best business practices in your industry.

For example, avoid actions that will cause a conflict of interest in your business, such as influencing company boardroom decisions through third parties.

9. Protect your company data

Exposing your company data to the public can lead to legal repercussions. Your clients, suppliers, and shareholders can suffer heavy losses due to data breaches.

Therefore, you must zealously protect your information systems from data thieves and cyber attacks.

Otherwise, you may face lawsuits for shoddy data storage practices and lose a lot of money while trying to appease angry clients and customers for breach of privacy.

This means;

  • Investing in secure data protection by using up-to-date anti-virus software
  • Hiring reputable data managers to oversee your data storage
  • Storing your hard copy information in an off-site secure location
  • Backing up your business files, contracts, and sensitive information securely to avoid losses if you get a security breach.
  • Fire-proofing filing systems and record rooms

10. Deal with accusations of wrongdoing immediately

If a claim of wrongdoing is made against you by a business partner, customer, supplier, employee or competitor, deal with it promptly. Do not let problems fester or ignore them, hoping they will go away. Be proactive.

The best place to start is by talking to your company lawyer.

This will save you from wasting time in unnecessary discussions and possibly keep you from lengthy legal entanglements that will cost you dearly.

Final thoughts on avoiding lawsuits for a small business

These are ten ways to bulletproof your small business against legal surprises.

If you adapt them in your business, you will significantly decrease your chances of facing lawsuits. You will also gain a reputation of being a law-abiding business owner.

However, business is full of ups and downs, so you may face some legal challenges occasionally.

If this happens, contact a reputable business lawyer to immediately help you with your legal troubles.

Posted by Full Editorial

Jacob Maslow chases the thrill of seeing long-lasting, measurable results for clients. Analytical in nature, he loves to work hard and tries topping yesterday’s results. An e-marketing manager and SEO strategist, he works with companies to see direct, measurable results that lead to higher conversion rates, and ultimately, increased profitability. The dynamic nature of SEO campaigns keeps Jacob on his toes as he is always challenged and continually growing his skills to succeed in the field. Jacob specializes in: • SEO strategies • Link building campaigns • User and customer acquisition • Pay-per-click campaigns Lowering promotion costs while growing site traffic is his specialty. He helped Tabcom, LLC reduce promotion costs by 75% for their email list building campaign while improving sales and opt-in rates. He also helped Allergy Be Gone’s sales grow to $4 million annually, doubling revenue. Jacob works as an SEO expert with PSM helping clients grow their traffic organically. His one goal for all clients is long-term profitable growth, and that is exactly what he offers to the PSM team. Jacob is also the owner of Mekomi.net as well as several Google News sites.