If you own a business, you should prepare yourself for the possibility of facing civil lawsuits. Though you may run your business within the confines of the law, accidents and oversights can happen to anyone.
Here are three tips to help you avoid facing unwanted legal issues.
1. Maintain written agreements
Retaining contracts for employment agreements and business arrangements between your entity and others can help in the resolution of disputes. Additionally, less formal agreements such as those for transactions can aid in resolving legal issues that could arise around goods or services you provide. Keep all receipts, invoices and emails to have information readily available should questions regarding your company come up.
2. Keep your personal and business finances separate
Creating a legal entity can aid in limiting your personal responsibility for company liabilities. The type of entity you select will determine whether you are liable for business-related debts. With proper planning, you could wind up personally responsible for lawsuits filed against a business you own. Absent any other means to pay the debt, you could actually lose your home.
3. Follow employment laws
Every business must follow both state and federal laws regarding employment. This includes laws regarding privacy, discrimination and harassment. Gain an understanding of which regulations are applicable to your type of enterprise and adhere to them strictly.
Running a business can make you vulnerable to lawsuits. Prepare yourself legally, financially and mentally for this possibility to avoid feeling blindsided if someone files a suit against you.