Starting a business on your own is a big step, one that comes with a lot of responsibility. One of the things you need to make sure you do as a new business owner is to take steps to protect both your business and your personal assets. Without taking appropriate measures, you could find yourself losing everything if you end up being sued for more than your company is worth. Fortunately, there are things you can do to prevent this.
Buy the Right Liability Insurance
Liability insurance is good to have, but you need to make sure you have the right liability insurance. Do you need product liability insurance? Professional liability insurance? Is general liability insurance enough? These are things you need to look into to make sure the coverage you select is right for your business. This helps you protect your personal finances if you choose to run under a sole proprietorship business structure. Liability insurance is useful for all business structures, not just sole proprietorships, so even if you decide to organize as a different entity, do your homework and make sure you’re comfortable with your level of coverage.
Set Up an LLC
If you want liability coverage built into your business structure, an LLC might be the way to go. Unlike sole proprietorships where you and your business are legally considered the same entity, an LLC is considered a separate entity. This means that the business’s finances, property, and earnings are separate from your personal finances and assets, which protects them from being seized to pay off debts. For an LLC to provide you the protection you’re looking for, you’ll need to make sure you follow all the rules and regulations. Creating an LLC involves paying your state fees to register it every year. Failure to do so may result in greater fines or your LLC being suspended.
Do Your Due Diligence
Accidents happen, as everyone knows. Businesses can be held responsible for accidents that happen on their own property, especially if the victim can show that the owner was in some way negligent in a way that resulted in the accident. If there are potential hazards at your business that you are aware of, such as sidewalks that get icy, do everything you can to address them. Make people aware that these hazards exist. And make sure you document everything. Should you find yourself involved in a lawsuit, that documentation of everything you’ve done to address the problem will be necessary for your defense.
Businesses are often held responsible for incidents that happen on their property or involve their products or services. You need to make sure you do what you can to protect both your business and your personal assets. Research liability coverage, business structures, and what you need to do to make sure you’re covered on your end. That way, should accidents happen, you’ll be protected from being held personally responsible.
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