Ways to Protect Your Small Business from Lawsuits


According to reports generated by Small Business Administration, every year, around 50 percent of freelancers and self-employed business people face litigation. No matter if you are a one-man-army performing small odd jobs or taking up entire projects with your freelance team, you can potentially meet lots of upheavals at work.

Customers can sue you over faulty products and waste of time. Additionally, many work-related damages at the customer’s expense can also get you into trouble. Most small businesses or freelancers work on a contractual basis or on-call. However, their services are not always legalized for indemnification. So under these circumstances, any laxity in services or product sales can lead to customer disappointment, and some can even backfire.

Litigation can cost you a lot of money, which small business owners have less of. Additionally, it can cost your reputation and time. Therefore, you should take the pain to avoid such instances.

Therefore, we have shortlisted ways to protect the self-employed or small business owners.

Keep Everything on Paper

When you take up any service delivery or an order for a product, you must have an agreement or terms ready. That is something that most online stores are doing now. When you buy a product from a particular site, businesses assume their customers have read and understood the terms and conditions. If you are doing services at your premises or the customer’s, you should have a written bill or agreement for that as well.

If any discrepancies or disappointments arise from your service, you can fall back on it for support in lawsuits. Good record-keeping also helps in numerous ways. As a small business owner or a freelancer, you can also keep a record book. After each service, you can get the customer’s signature on it. So they cannot report anything out of the way after they go back. Employment contracts can also be acquired if you have a team under you. Get in touch with a litigation expert for such forms and agreements. They will not leave any loopholes and keep you safe.

Form a Company or an LLC

Most small businesses operate as sole proprietorships. They are the easiest to form and start. In comparison to them, opening a company might be a tough nut to crack, as you have to pay a lot of attention to documents and permissions. However, the former might be a risky proposition for you. The reason is loud and clear. As an owner, if anything goes wrong, you will also be personally liable to compensate for the same. In case of a lawsuit, your assets and finances might also be at stake.

You can take the other route of a limited liability corporation. It is a protective option to start your services or sales. It keeps the business entity and personal assets separate. Therefore, if a customer files a lawsuit against you, you do not suffer. Explore the benefits of the latter with assistance from a legal expert.

Man in business suit showing an insurance policy

Get Indemnity Cover

Another manner by which you can reduce the impact of a lawsuit is by getting insurance for your contractors. This is what most freelancers and handypersons have for themselves. Such policies can assist freelancers and small business owners in segments about bodily injury of workers, property damages, customer injuries during service, or any copyright infringement.

An auto instance can also prove helpful if you own a vehicle, especially in traffic incidents. It is especially true if you drive around in the car for services and meet with an accident. Depending on the nature of your business, you might need other covers as well. It can be something about the employee’s compensation or general liability. The main aim is to keep your business afloat in the event of unfavorable circumstances. Some sectors that benefit from such covers are construction, beauty, wellness, handyman jobs, and many more.

Protect Your Reputation

This is as important as anything else. You should always conduct all your dealings with integrity. No matter with whom you are dealing, customers, employees, vendors, competitors, or the community. You have to be vigilant regarding your dealings. You have to ensure to deliver as promised. Misrepresenting your business in front of others can backfire at any time.

It can lead to mistrust, and customers might start leaving you. There will be two types of customers. There will not say anything but will spread the word about your business. The second group of customers is the one that will send you a legal notice. So, always be accurate in all your dealings and maintain transparency. It will lead to a great work atmosphere and get you more customers in the future.

Above all, you need an expert legal advisor to guide you. These are a few of the ways you can protect your services or small business from lawsuits and litigation.

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