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What steps should I take to protect myself from personal liability as a business owner in California?

Picture of Chris Battis By   ·  1 minute read

As a business owner in California, there are several steps you can take to protect yourself from personal liability. The following are some recommendations to help you minimize your personal exposure:

  1. Incorporate your business: One of the easiest and most effective ways to protect yourself from personal liability is to incorporate your business. By doing so, you create a separate legal entity that is distinct from yourself. Therefore, any debts, judgments or lawsuits filed against your company are generally not your personal responsibility.
  2. Maintain proper corporate records: Once you have incorporated your business, it is important to maintain proper corporate records. This means keeping your company’s finances, meeting minutes, and other important documents in order. Proper documentation of your business activities will help establish that your personal assets are separate from your company’s assets.
  3. Obtain insurance coverage: Make sure to purchase adequate insurance coverage to protect yourself and your business. This may include general liability insurance, workers’ compensation insurance, and directors and officers liability insurance. Having proper insurance coverage can help mitigate the risk of personal liability.
  4. Use contracts and agreements: Always use written contracts and agreements when doing business with others. Contracts are designed to protect your interests and can help limit your personal liability. Be sure to have experienced legal counsel review and negotiate any contracts before you sign them.
  5. Follow all laws and regulations: Ensure that your business complies with all applicable laws and regulations. Failure to comply with these laws and regulations can result in personal liability.

While these steps can help protect you from personal liability, they do not provide absolute protection. There are certain exceptions and limitations to liability protection, and it is important to seek the advice of a licensed attorney to determine the best strategies for your specific business needs.