While starting your own business can be one of the greatest things you ever do, it does not come without risk. Risk can come in many forms including disaster, debt and legal liability. Successful business owners are cognizant of the risks involved in owning and operating their venture and must manage these risks at every juncture. Fortunately, there are things that you can do to protect yourself in these situations.
First, you must think about risk even before forming your business. A major part of how your business manages risks comes from your business structure. Sole proprietorships and partnerships do not offer the personal asset protection that corporations and limited liability companies (LLCs) do. The corporation and LLC are considered separate legal entities and therefore their owners and managers are usually not personally liable for debts of the business, except in certain specific situations. Overall, the structure of your business will have an impact on how you manage risk.
Once your business is formed, it is imperative that you obtain the appropriate insurance. Some businesses are mandated by law to carry certain types of insurance. Even if yours is not, you should always have some form of liability coverage. General liability, errors and omissions insurance, specific coverage for corporations and many other types of insurance are available. You should choose the insurance that is right for your business and stay up to date so that there is never a lapse in coverage.
Even though you have taken steps to manage your risk, you should still act cautiously in your day to day operations. Do not to make statements in any forum that can be considered defamation. It is also important that you pay attention to who you do business with as their reputation can and will be imputed to your business should a controversy arise. In addition, do you best to avoid conflicts of interest as they can result in your business being viewed in a negative light and possibly expose you up to personal risk and liability.
All small business owners should develop a relationship with an experienced attorney early on. It is essential to the success of a small business to retain someone to advise you on risk management. Austin, Texas business law attorney Sanjeev Kumar can help. Call (512)323-6060 for a consultation today.