INSURANCE AGENCY NETWORK Blog
American small businesses have ended up paying more than $105 billion for liability costs and even spent $36 billion for settlement of lawsuits each year, according to the US Chamber Institute for Legal Reform. Median costs for litigation can be around $54,000 for a case of premises liability. Thus, business owners need to take great care to protect their businesses from any form of legal action.
Here are five ways you can safeguard your business from costly lawsuits.
Do Not Combine Personal and Business Finances
Maintain separate accounts for your personal and business finances. Conduct all your company business only on documents with your business name on. It is strongly recommended so that your personal finances would not be under investigation in case litigation happens. You should do this even if you have an established separate LLC or corporation.
Get Everything in Writing
You should never underestimate the importance of putting everything on paper and keeping good records. It is important especially if you are dealing with your employees. Get an employee handbook to have all violations and disciplinary actions documented. Keep your employee training up-to-date while you keep records of any customer complaints as well as employee responses to these complaints.
Establish an LLC Or Corporation
NASDAQ would advise that you should incorporate your business or at least establish an LLC, or a Limited Liability Company. It is a step that should separate your business from your personal identity. Thus, in case your business is sued, then your personal assets are safe. However, you should not assume that an LLC can protect you from all forms of liabilities. Only business insurance can do that.
Keep Away from Personal Guarantees
Never use your personal names to sign company contracts. Use your official job title instead. Do not assume personal responsibility for loans or debts because that will make you lose the protection of your company in case you get into trouble. You become personally liable once you sign with your personal name.
Get Business Liability Insurance
The US Small Business Administration emphasizes the importance of business liability insurance. If you have this type of policy, rest assured that your business is protected in the case of untoward incidents, lawsuits or natural disasters.
Some Final Words
Whether you are running a small-scale business with three employees or a big one with more than fifty workers, you should think of getting business insurance. Small business owners often take this for granted until they get sued. At Insurance Services of the West, LLC, we aim to make our client's life easier with policies that are tailored to their needs. You can get more information about our products and services by calling our agency at (425) 681-0996. Get your free quote today by CLICKING HERE.