Starting a business is fun and exciting for most entrepreneurs. However this feeling of euphoria will quickly retreat if your business is sued. The court room is the obvious enemy of the small business owner. However, fear not! By following these five simple rules you can avoid facing the courtroom so you can focus on the success of your business.

1. Be very cognizant of your business image. Owners and employees should avoid making any public announcements or conducting any business that might be considered questionable. Avoid things such as making slanderous statements or having unnecessary contact with customers. This includes limiting possible conflicts of interest. Situations such as these can damage the integrity of your business and land you in legal turmoil. To avoid legal action, do the job your business was created to do in a professional and neutral manner.

2. Hire a competent attorney. While not always necessary, business owners should have a ready legal contact in the event the business is sued. Business owners should attempt to secure an attorney that is familiar with local laws and customs and the type of business in which you engage. Finding an attorney is simple with resources such as the yellow pages and Google. Even if your business is never sued, many business owners need different forms of legal advice. Securing competent counsel is a good idea.

3. Separate yourself from your business. This can be achieved by incorporating your business. Operating your business as a sole proprietorship leaves the owner’s individual assets open to attack by creditors. Incorporating your business separates your company’s finances from your own. Make sure that you do not mix personal and business expenses. Do not pay for business related expenses out of a personal checking account. Create a business account that is used solely for your company. This will clearly define the line between you and your business.

4. Insure yourself. All businesses should obtain liability insurance in the event that, if you own a retail business, a customer was to slip and fall in your place of business. In addition to purchasing insurance, another way to insure yourself against liability is to build protection into your contracts. If an act of nature, a specific supplier or some other uncontrollable act can make it impossible for you to fulfill a contract (and thus open yourself up to legal action) then you should be putting to ink that you are not liable for incomplete work due to these factors. Discussing the possible clauses and legal phrases needed in your work contracts is one of the best ways to employ your lawyer’s time and it will reduce your need for a lawyer later on in your business venture.

5. Protect your business files. First, make sure that your business has updated antivirus and other types of security software loaded and activated on their systems. If a computer system were to go down because of a virus, the business may be at risk of not being able to perform certain contracted work. Also make sure that you keep record of email communication with your customers. In the event of a lawsuit, it is often your customer’s word versus your own. Recording communication will provide all the evidence necessary to defend your business.

Separating your assets from that of your business is crucial. Retaining competent legal counsel, protecting your business files and communication as well as insuring your business will hopefully keep your business out of the court room for good! Learn more about ways to maintain your business, or how to incorporate HERE!

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