The last thing that any business wants, no matter its size, is to be caught up in a lawsuit, as this can have damaging effects. In this article, we’re going to help prevent lawsuits by providing five helpful ways to protect your small business.

Business owners, in general, whether small, medium, or large, have a responsibility to protect their business from any type of business lawsuit. Where lawsuits do occur, they can ruin a business’s reputation, affect the business operation, and present many other implications.

If you are involved in a business lawsuit, it’s always recommended to seek a dispute resolution solicitor, who will be able to provide advice and the appropriate options available to you. 

Preventing lawsuits completely isn’t always possible, but there are measures that can be taken to limit the risk. To prevent such matters from happening in the future, it’s important to have protection measures in place. For this reason, we have listed five ways to protect your small business from lawsuits. Keep reading to learn more…

How can a lawsuit impact a small business?

Some of the impacts that a business lawsuit can have on business include:

  • It can ruin the reputation
  • It can be time-consuming
  • It can be expensive
  • It can affect business operation

As shown above, commercial disputes can be catastrophic to a small business, and for this reason, it is wise for business owners to take every action possible to avoid such events from occurring.

What lawsuits could a small business face?

Small businesses could face a number of different lawsuits, including:

  • Product liability
  • Accident at work
  • Contract breaches
  • Discrimination

Whilst these are only a small number of the potential lawsuits that a small business could be liable for, there are additionally many other types.

How can a small business protect itself from lawsuits?

There are many protective measures you can put in place to assist in preventing a lawsuit from occurring. Examples of these include:

1. Put All Agreements in Writing

When owning a business, anything you do which could potentially impact your business if something goes wrong, such as requesting third-party services and employing employees, should always have signed agreements. Where you do not have an appropriate contract in place could mean that future lawsuits could happen. It is also incredibly important to keep contact documentation, such as emails, letters, etc.

Whilst it might seem pointless doing this in some instances, if a conflict ever arises, these documents can support you and prevent the disputes from escalating.

2. Have a Specialist Solicitor

Businesses should always seek advice from solicitors when starting a new business. Solicitors have extensively worked with all types of business in different fields and of different sizes. By choosing an expert solicitor to support your business, it means that should any lawsuits occur, you have a solicitor there to support your business.

3. Separate Yourself from Your Business

Many business owners do not separate themselves from the business, usually opening as a sole trader instead of a limited company. Although separating yourself from the business by making it a limited company doesn’t necessarily protect your business from a lawsuit, it does protect you personally from being liable.

To learn more about why you should change to a limited company instead of a sole trader, please see Company Bug.

4. Have Insurance

It’s always better to be safer than sorry, and that applies to purchasing insurance for your small business.

One type of insurance that small businesses legally have to operate is Employers’ Liability insurance (EL). What EL covers are accidents and injuries at work. 

Despite this being the only insurance small businesses need legally, it is worth investing in other types which can assist where lawsuits may potentially occur, including Public Liability Insurance, Professional Indemnity Insurance (PI), Directors’ and Officers’ Liability Insurance (D&O), and Cyber Liability Insurance.

For further details in regard to business insurance, see the GOV.UK Companies House page.

5. Be Smart About What You Post Online

The reputation and prevention of lawsuits for small businesses are crucial, and any type of mistake, such as slander, defamation, etc., can explode and cause plenty of problems, including a lawsuit. Online media posting can often be the cause of many lawsuits, and for this reason, be certain of facts, permission, sources, and other important aspects prior to publicly posting.

Protect Your Small Business

What we can conclude from this article is that no matter what, lawsuits can happen, and for a small business to be involved in such a dispute can be highly damaging for its future of it. Where you are looking to open a new business or already run a small business, ensure that you are taking all of the possible precautions to prevent a lawsuit from being brought against your business.

What protective measures do you have in place for your business? Leave a comment below.

Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a legal professional if you’re seeking advice about avoiding a lawsuit. We are not liable for risks or issues associated with using or acting upon the information on this site.

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