According to a Small Business Administration survey, 36–53% of small businesses have to deal with a lawsuit every year, and many small businesses receive a threat of a lawsuit. These statistics are far too high for comfort. In order to protect yourself and what you have worked so hard to build, you need to keep a lawyer on retainer and register your business as anything but a sole proprietorship.
Have an attorney on retainer
Even if your business is small, it’s a good idea to have an attorney on retainer. A lawsuit can devastate a small business that doesn’t know how to handle a legal problem that arises. You will feel stressed enough over someone suing you that you don’t want to spend time searching for the right business litigation lawyer. Do that research now, and get a lawyer whom you would want representing you on retainer.
Consult with an attorney early on
Whenever you have a business-related dispute, you should consult with a lawyer to reduce the chances of the conflict turning into a lawsuit. Business litigation lawyers don’t just represent businesses in court. They attempt to resolve conflicts without expensive, timely litigation. Because they are well-versed in business law and have negotiation skills, they are helpful in preventing lawsuits.
Don’t own a sole proprietorship
Many businesses are sole proprietorships without realizing the risk they are taking on. When someone sues you, a court could take your personal property and assets away in order to award the plaintiff compensation. You should register your business as a different type of entity, such as an LLC, in order to protect your personal property and assets. Another way of separating your business’s assets from your personal assets is to set it up under a trust.
No matter how much you attempt to do and say all the right things in business, someone out there will want to sue you. This is why it’s important to know ahead of time what to do in such a situation and who you can count on to help you get through the problem with minimal damage to yourself and your business.