Small Business Law
Whether starting a business or growing an established enterprise, liability and risk are facts of life. Keeping those risks to a minimum is a never-ending endeavor that requires constant vigilance and effort. Our firm can minimize liability for the small business enterprise.
Potential Areas Of Risk In A Business
Liability takes numerous forms, ranging from risks with customers and employees to government regulations and market conditions. Some of the most common risk areas businesses face include:
- Customers: While you want to offer your customers the best service possible, your relationship with them can sour in many ways, including those that involve legal matters. These can take various forms, including information protection and privacy, misinformation (false advertising), breach of contract and even civil lawsuits for personal injury.
- Employees: Employees relationships can also pose a legal risk. Making sure you hire people who are right for your enterprise is key, but so too is avoiding issues with discrimination, unlawful termination, and workplace safety.
- Market Conditions: Market conditions often present a great deal of financial risk to companies, but there are some legal considerations here too. The simplest form these could take is if current conditions limit your ability to deliver on promises and pay back investors. Keeping up with these responsibilities may be difficult if the market swings the wrong way.
- Real Property And Leases: Whether you’re renting it, selling it or using it to conduct business, real estate is rife with liabilities and obligations like the Americans with Disabilities Act. You typically owe a duty of care to those who visit a property you own, and if someone gets injured, it can be costly for your business. Purchases and leases can be risky in that they can have numerous uncertainties, moving parts and regulations.
- Executives And Leadership: Senior executives and leaders have numerous legal duties. Accountability is a major factor here, particularly where finances are concerned. Upholding ethics and complying with regulations is also important for minimizing liability.
- Business Partners. Relationships with other companies are frequently a source of risk. Liability could stem from disputes over agreements, failure to deliver on promises or even perceived slights. Knowing how to prevent these disputes — and resolving them as elegantly as possible when they do arise — is vital to effective risk management.
- Taxes. Tax liability is an ever-present matter for most businesses. As important as it is to keep tax exposure down, it’s more important to stay within the bounds of the law when doing so. Knowing how your organization fits within the tax code is vital to sustaining profitability.
Best Practices For Minimizing Business Liability
When you’re striving to keep your risk down, there’s a wide range of best practices to implement. The following tips are just a few ways to minimize liability for your organization, whether you’re a small family business or a large corporation.
- Treating Legal Counsel As A Business Partner. First, make sure you don’t try to do it all by yourself. Let our attorneys provide legal counsel. Treat us as a business partner. Involve us in the numerous decision-making processes that are part of running your company, whether developing and revising policies, negotiating contracts or navigating a dispute. Our attorneys can provide insight into the legal implications of everything the business encounters. An ounce of prevention is worth a tons of court.
- Choosing The Right Corporate Structure. Choosing the right corporate structure is key to minimizing liability for both the business and its stakeholders. Having the best corporate structure, like a Limited Liability Company (LLC) form, can provide the business owners’ assets with a shield from lawsuits. In addition, the corporate structure can impact other legal areas, such as what regulations pertain to the business or how it is taxed. Carefully consider all of these items when choosing an entity type for the business.
- Taking A Legal Inventory And Identifying Areas Of Risk. To safeguard against lawsuits and other legal risks, a business owner should take stock of where the business is vulnerable. With legal counsel, take a careful, thorough inventory of the business’s current legal standing, and identify areas of risk. This legal inventory should take laws, practices, contracts, employees, ethics, environmental matters and even your current marketplace climate into consideration.
- Written contracts protect. We don’t live in the days of a handshake anymore. Contracts can seem like a pain, but they are a great deal easier than expensive, drawn-out legal fights that can occur in their absence. No matter who the business is working with, how long they have been known, or what role they’re filling with the company, contracts are an assurance against any future legal issues.
- Reviewing Policies And Practices. With areas of risk in mind, review policies and practices and make improvements where needed. The policies should support compliance with all pertinent regulations, but that won’t accomplish much if the current practices and corporate culture fail to do the same. Find ways to bring both in line with all relevant legal standards and best practices.
- Solidifying Business Contracts. Business contracts are complex agreements with many moving parts. They’re all worth reviewing on a routine basis, particularly if the business team notices that some business relationships are becoming less profitable. As the business develops, the contracts will often need to change. In addition, if there are any weak points in the agreements, those should address and renegotiate those when necessary.
Minimizing Liability — Never “One and Done”
The most important item to remember when it comes to minimizing liability for a business is that it’s never a one-and-done endeavor. Continuous improvement is key, so the modern business leader should keep revisiting their policies and practices on a routine basis.