Tips to Protect Your Small Business from a Lawsuit


Running a small business can be quite challenging and sometimes demanding, as you need to make every possible effort to keep your business up and running smoothly. Lawsuits are the single greatest threats that small business owners face. However, with the following tips, you can limit the possibility of being sued and ensure business continuity.

Watch what you say and do

It is important to look after your business image. You and your employees should avoid making any public announcements and hosting events that can be seen as questionable. Working with individuals who are known for shoddy business practices can cause problems to your company’s ethics because if they are exposed, your company’s name can also be damaged.

Hire an attorney

It is good to have a lawyer by your side, as they can recommend the right steps to take if your company is being sued. Hire an attorney familiar with the laws and regulations in the area where your business operates and has experience in a particular field if required. If your company has or anticipates tax-related issues, you can hire a tax attorney to resolve such issues.

Have a separate legal identity

Many business owners run their businesses as sole proprietorship. This will cause problems for your non-business (your home or car) assets if your company is sued. To avoid this, you can either have a trust that owns your business or separate your company and personal finances. This will ensure only your business-related assets can be taken if your company is sued.

Secure your data

Most businesses rely heavily on computers to complete their business operations. However, system security matters a lot. If you use computers for your business purposes, you must make sure your computers are updated with the latest antivirus and security software to prevent them from being hacked. Otherwise, your files may get stolen, damaged, or hacked by cybercriminals.

Insure your business

You should obtain liability insurance and errors and omissions insurance to protect your business in the event of a lawsuit. You can also add liability protection in your contracts to state that you are not responsible for the incomplete work that results from an act of nature, a specific supplier, or an uncontrollable act.

With these tips, you can protect your small business from a lawsuit. Are you looking to buy the right business insurance? For assistance with all your coverage needs, contact an insurance professional at Westwood Insurance Agency today.