5 Rules for Protecting Your Small Business from Legal Fallouts
When running any small business, there’s the potential for problems to flare up and become legal issues if you’re not too careful. To avoid your business plans getting derailed, it pays to set up ways to mitigate or remove certain business risks where possible.
For the smoother running of your business, it’s necessary to follow a few simple rules to ward off obvious potential problems before they occur.
Here are 5 rules to use as a small business
1. Check the Trademark Registry
Before using a brand or company name, it’s important to verify whether there’s an existing trademark under that name.
A trademark can be a design such as a logo, or it may be a trading name. Generally speaking, you should avoid trading using a name that’s the same, similar, or could be confused with another brand in the marketplace. While for smaller companies with a trademark, avoiding using their registered mark in the same line of business is sufficient, for conglomerates with wide-ranging business interests, they may take objection to the use of the name regardless of the marketplace.
To avoid needing to re-register a different name, start again, and smooth over ruffled corporate feathers, checking that the selected name is free avoids headaches. The TESS database search is a quick way to do a spot check.
2. Organize a Terms and Conditions Statement
A Terms and Conditions document broadly lays out the terms and certain conditions that the business is working under. Typically, the T&Cs are seen on a website or app to clarify what the business aims to provide and under what circumstances.
The idea is to cover the ins and outs of what will happen, how data is collected, how data is used, whether cookies on a computer are activated, and how analytical and/or advertising systems may track your activity.
The best way to create this type of document is to use a systematic approach. You can click here to find the best terms and conditions generator, which makes the process painless. Then you can add the T&C statement to your website very fast.
3. Use Written Contracts
Everything is up to interpretation. People hear different things even with a verbal agreement and form different beliefs about what was agreed upon. As such, two parties can have a very different idea about what was decided and there’s often no proof because it was a verbal agreement. This leads to problems with a so-called “Handshake agreement” especially as the details of the deal points become more complex.
Whether dealing with a client, service provider or another party, a contract broadly lays out what is expected of both parties, who agrees to pay what, and what the purpose of the engagement is. Contracts should remove any ambiguity over who is taking responsibility for certain aspects, which reduces the potential for legal issues should a dispute occur later.
4. Incorporate the Business
While incorporation in its various forms is not a direct way to avoid a lawsuit per se, what it does do is provide some degree of extra protection.
The alternative is trading under your name. This is problematic for a variety of reasons, including failing to limit the potential legal liability should something go wrong.
Remember, you don’t have to have done anything wrong to get sued. Other companies or individuals can decide they feel wronged – whether that’s factually true or not – and the cost of defending or settling a case can be prohibitively expensive.
When trading as a business and not under your name, usually your assets are ring-fenced and business assets separated. This affords a reasonable amount of protection from business activities.
5. Get Insurance
Having business liability insurance protects companies from some of the cost of lawsuits because an insurance company offers cover. These policies may protect against someone on the business premises slipping, falling and injuring themselves. They may also provide considerably more protection depending on the clauses included in the insurance policy.
Insurance is relatively inexpensive to take out for most types of business operations. There are also several types worth exploring depending on the type of business that you’re actively running. Get as much as necessary to protect the underlying business.
As long as you do what’s necessary to protect the business, then it avoids making mistakes of omission that can be the most problematic.