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What are the steps I need to take to protect my small business from liability?

Picture of Chris Battis By   ·  1 minute read

To protect your small business from liability, there are several steps you should take:

  1. Determine the type of legal entity: The first step is to determine the type of legal entity for your small business. This will depend on various factors such as the size of the business, the nature of the business activities and the risks associated with it. You can choose a sole proprietorship, partnership, corporation or LLC.
  2. Obtain all necessary licenses and permits: Every business type requires different licenses and permits. Failure to obtain these licenses and permits can result in financial penalties, fines or revocation of the business license. So, it is essential to ensure that you have all necessary licenses and permits in place.
  3. Purchase appropriate insurance: Business insurance is essential to protect your business from liability. Liability insurance is designed to provide coverage in case someone is injured or property is damaged as a result of your business activities.
  4. Create a robust contract: Contracts protect all parties involved in business transactions. Ensure that you have clear, written contracts in place for all business activities, including sales, leases and employment agreements.
  5. Implement workplace safety policies: Injuries that occur in the workplace can cause significant liability claims against the company. That's why it is essential to develop and implement workplace safety policies.
  6. Keep accurate financial records: Keeping accurate financial records is necessary to ensure that your business remains functional and solvent. Proper financial record-keeping can also limit liability risks during disputes or audits.
  7. Train your employees: Providing your employees with proper job training can significantly reduce the risk of injuries, accidents, and exposure to liability.

In conclusion, protecting your small business from liability requires attention to detail, proper planning, and adherence to legal requirements. Consult with an experienced attorney to ensure that all of these steps are correctly implemented.