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By Sanjeev Kumar
Founding Attorney

Starting a business can be a great entrepreneurial endeavor. The ups and downs of businesses can, to a certain extent, not always be planned for. Some of the bigger downs, however, are often preventable. Exposing your business to lawsuits, for instance, can be greatly minimized with the right planning. Here, we will talk about some of the best ways you can protect your business from a lawsuit. Note how you can apply these in your own business and avoid the cost, time expense, hit to your reputation, and overall stress that can be caused when a lawsuit is filed against your business.

How to Protect Your Business From a Lawsuit

Before speaking about how you can protect your business from a lawsuit, it is important to mention that you should also consider protecting yourself from personal liability in the event that your business is involved in a lawsuit. One of the best ways to do this is to incorporate your business. Lawsuits can sometimes arise despite our best efforts and you should be prepared and protect yourself as well as you can. Setting up your business as an entity such as an LLC will shield you from personal liability should this happen.

To protect your business from lawsuits, laying some foundational practices can be key. All agreements should be in writing. Put formal contracts in place, such as employment contracts and those for general sales. Furthermore, keep accurate records, always. If a problem ever arises, turning back to formal, written agreements and thorough, well organized records can be a real lifesaver.

Foundational practices and foundational documents, again, can be the first and second line of defense against lawsuits. To strengthen these defenses, put company policies and procedures in writing and be diligent in enforcing and implementing them. Make sure all staff has copies of these documents and understands what they mean as well as what is expected of them in terms of compliance with the document requirements. Employee handbooks can also help employees to learn company policies as well as to perform their jobs in accordance with said policies.

Understanding and employing sound employment practices will also go far to staving off lawsuits. This, however, may be easier said than done as there are a number of both state and federal laws concerning employment rights and responsibilities. Being familiar with these laws is important. Pay particular attention to those laws which may be uniquely tailored to your type of business. Create your company policies in accordance with the relevant employment laws and put procedures in place to help ensure compliance.

Business Law Attorney

Having a trusted attorney by your side can also be a solid way to prevent lawsuits against your business from arising. Consulting a dedicated business attorney throughout your business endeavors and right from the start can go a long way to preventing some serious legal headaches down the road. For all of your business law needs, the Kumar Law Firm is here for you. Contact us today.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.