Being sued can damage your company’s finances and reputation. Even when the complainant doesn’t have just cause, even the rumour of litigation can be enough to cause you to lose custom. With so much at stake, it’s important to take action to minimize the risk of your business sued. Not sure where to start? Take a look at these top tips to stop your company being sued:
This is a contributed post. Please refer to my disclosure for more information.
Choose the right structure
When you launch a brand new small business, you’ll have the option to work as a sole trader or to form a limited company or a partnership. A limited company means your personal finances and the company’s finances are kept separate from one another, both legally and practically.
If your business does face legal action, your personal finances and assets aren’t at risk. For many business owners, taking a relatively high wage, and keeping company funds low is a method of dissuading people from taking legal action against the firm.
Follow health and safety regulations
If you don’t adhere to relevant health and safety regulations, you won’t just be a prime candidate for a lawsuit; you could be breaking the law. From maintaining a safe temperature in the workplace to following load limit charts when using equipment and machinery, there are many aspects of health and safety to consider. You’ll need to risk assess your business and operations on a regular basis to ensure you’re complying with relevant laws and guidelines and take action to ensure your company’s health and safety record is perfectly maintained.
Get insurance policies
Having insurance will give you peace of mind that potential lawsuits can be resolved without bankrupting your business. If a worker is injured at work and you’re responsible, employee liability insurance should cover the cost of their compensation, for example. Similarly, product liability insurance should cover payouts if anyone sustains harm because of a faulty or defective product you’ve released.
There are many different types of liability and business insurance, so be sure to get the right combination of policies. With enhanced cover, you can be sure that your company is well protected and has defences in place to deal with potential litigation.
Have contracts professionally drafted
If you rely on informal agreements or verbal contracts in your business, you could increase your chances of being sued. When there is ambiguity in a contract, either party could decide to sue if they feel the terms of the agreement haven’t been fulfilled. That’s why it’s important that all of your contracts are detailed, clear, and written in accordance with the law. Fortunately, having your contracts professionally drafted by a lawyer is easy, simple, and straightforward.
Protect Your Company
When you’re first starting out in business, the last thing you’ll be thinking about is your company being sued. However, it’s far more common than you might think. By having a strategy in place to reduce the risk of litigation from the get-go, you can ensure your business is properly protected at all times.