Updated May 20, 2024
As a small business owner, you’re already juggling countless responsibilities. Legal protection might not always be top of mind—until you need it. These vital strategies can help you proactively protect your business and reduce your legal exposure.
Your business structure affects your taxes, liability, and how you operate. Sole proprietorships offer simplicity but leave your personal assets exposed. LLCs and corporations provide liability protection that separates your personal and business finances. Choosing the right structure for your situation is one of the most fundamental legal decisions you can make.
Verbal agreements are difficult to enforce. Written contracts protect you by clearly documenting the terms of every business relationship—with employees, vendors, clients, and partners. Make sure contracts cover scope of work, payment terms, dispute resolution, and termination provisions.
Your business name, logo, and original content may qualify for trademark or copyright protection. Taking the steps to register and protect your IP prevents others from using your brand and gives you legal recourse if they do.
If you have employees, you’re subject to a wide range of federal and state employment laws governing minimum wage, overtime, workplace safety, anti-discrimination, and more. Staying compliant reduces your risk of costly lawsuits and government penalties.
Mixing personal and business finances can “penetrate the corporate veil”—exposing your personal assets even if you’ve set up an LLC or corporation for liability protection. Maintain separate bank accounts and credit cards, and document all financial transactions properly.
Operating without required licenses or permits can result in fines, forced closure, or personal liability. Know what’s required for your industry and location, and renew licenses on time.
Rather than calling a lawyer only when something goes wrong, proactively building a relationship with a business attorney means you have knowledgeable support when you need it. A LegalShield Small Business Plan gives you ongoing access to a provider law firm at a predictable monthly cost—so legal help is there before, during, and after a problem arises.
Explore LegalShield Small Business Plans to learn how we can support your business.
Choose the right business entity for your enterprise, which will shield your personal assets from business lawsuits. To help with that choice, consult with a business lawyer to learn how to protect your small business.
Liability insurance offers all-around legal protection for small business owners and will minimize litigation risks because there is available money to pay for the losses.
If you’ve been wondering ‘how do I protect my company from a lawsuit?’, follow these seven steps to minimize liability: choose the right business entity for your enterprise and set it up the right way. Put everything in writing. Understand employment law. Protect your intellectual property. Get liability insurance. Pay your taxes properly. And get a good business lawyer.
LegalShield offers a wide range of affordable, on-demand services from document review to legal help with civil lawsuits online.
An indemnity agreement settles the “who is responsible” question ahead of time. One party promises, in writing, to cover certain losses tied to the work, so the other isn't left with the bill. These promises appear in construction contracts, leases, and business sales.
A certificate of good standing is official proof from your state that your business is registered and current on its requirements. Most lenders and agencies want a recent one, so it helps to know how to get it before someone asks.
Whether the goal is selling a company, bringing in a business partner, or passing it to a family member, the LLC ownership transfer often involves reviewing the LLC's operating agreement and the applicable state's rules.
If you want to do business under a name that isn't your own legal name or your LLC's registered name, you need a trade name, also known as a doing business as (DBA) name.
A consulting agreement is a contract between a service provider, such as an independent contractor, and a recipient.
Hold harmless agreements can help reduce a business's liability by having signatories accept a certain amount of risk.
Getting an LLC in New York generally involves choosing a business name, filing Articles of Organization with the New York Department of State, creating a written Operating Agreement, completing New York’s publication requirement, and handling tax and business setup steps, like getting an EIN.
