4 ways small business owners can handle liability issues

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By Brooke Chaplan

As a small business owner, you have a lot to deal with. From handling payroll to collecting on accounts payables, the duties may seem like they never stop. Unfortunately, one area that many small business owners forget about until it’s too late is liability insurance. Here are four tips for handling liability issues regarding your business practices. By following these tips, you will be able to handle any liability issues that may come your way.

Start by selecting the right business structure

There are many different types of entities that a business can be formed under. These include sole proprietorship, partnership, LLC, c-corp, and s-corp. Not all of them provide the same level of liability protection for the business owners. In general, those who do business under a partnership or sole proprietorship are personally liable for all business liabilities. Those who use an LLC or s-corp are not personally liable for business liabilities.

Get insurance

Liability insurance is a must-have for every type of business out there. This type of insurance protects the financial interests of a company and its owners in the event of a lawsuit. Liability insurance protects your business for instances like property damage claims, medical claims, and so forth. Depending on the specific practices of your business, you should ensure that you get an insurance policy that meets your day-to-day needs. For instance, architectural firms will need insurance policies that protect them from liability issues resulting from injury from construction or architectural design issues. Engineers and environmental law consultants will need to look into liability insurance that takes into account the specific needs and requirements of their business models.

Hire a small business lawyer

The small business arena can be a tough one to navigate at times. Hiring a skilled small business lawyer can provide that added layer of protection that you need to make more legally-informed decisions. Your business lawyer can assist you with things like lawsuits, licensing, and even employment contracts.

Construct a business interruption plan

While you may not want to think about what you’re going to do in the event that your business faces a large lawsuit, you need to. A business interruption plan works to lay the groundwork that will allow your business to function optimally when it’s threatened by a large lawsuit. This plan should be constructed by a team of designated trustees who can assess the changes in key business areas in the event that your business is hit with a lawsuit.

Being proactive in handling business liability issues is a must to ensure the survival of your business. While you can’t predict the future, you can easily prepare for it with the tips above. Realize that the more you do to prepare today, the less likely major liability issues are going to threaten the survival of your business in the future.


Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan.


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