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Lawsuit protection tips for your small business

On Behalf of | Jan 31, 2023 | Business Litigation |

California small business owners understand how costly litigation is and how damaging lawsuits can be to their companies. Avoiding lawsuits is crucial to longevity and the brand’s integrity. One essential tip to prevent lawsuits is to know the laws surrounding your business. In business litigation, not knowing the law can make your business vulnerable on federal, state and local levels.

Small businesses might face customer dissatisfaction complaints. Some customers will accept a simple refund while others might seek damages through a lawsuit. Savvy small business litigation allows some matters to settle out of court wherever possible.

Common types of small business lawsuits

Each industry comes with particular risks, and accurate documentation of sales transactions, employee files and compliance regulations is essential to reducing vulnerability and protecting your small business if a claim is filed. The following are examples of lawsuit types that companies face:

  • Discrimination
  • Harassment
  • Contract breaches
  • Accident, injuries or property damage
  • Wrongful termination

Slip-and-falls are common claims, but many small business owners face more serious allegations, such as harassment or wrongful termination. These claims can lead to formal complaints, which get very expensive.

Liability insurance

Business litigation can expensive and last for a long time. These long-term costs can bankrupt a small business, and the publicity can harm the company’s reputation. Many industries offer insurance protection against potential lawsuits. Liability policies cover litigation costs and most of the damages. Coverage varies, so getting the right policy to fit your small business needs is vital.

Keep things separate and accurate

A limited liability company (LLC) incorporates your sole proprietorship and protects your assets against lawsuits aimed at your business. Personal assets must be separate from your business and fully detailed, including the start, end or current business activity dates. Good record-keeping and strong policies are of great value if your company gets sued.