A lawsuit can destroy even a very established and valuable company. The best time to start protecting yourself against potential lawsuits is at the beginning when you're first establishing your company.
It's important to be aware of the following four potential business setup mistakes that could leave your company open to lawsuits down the road if you're not careful:
Not protecting yourself behind a corporate veil
Any good corporate lawyer, such as George M Cappello, Lawyer, is going to encourage you to set up a corporation rather than a sole proprietorship. This business setup will separate a company's finances from the business owner's personal finances.
While setting up a corporation won't necessarily reduce your chances of being sued per se, it will protect your own personal assets from a lawsuit filed against your company. This could potentially discourage potential plaintiff's from filing suit against you. If your company itself does not have a lot of its own assets, a lawsuit that is successfully won against your company will not be very lucrative because it will not be able to turn up much money.
Failing to research a company name
When you initially establish a company, you may not get a lot of attention right away. However, as you become bigger, other companies and entities will take greater notice of you. This makes it important to be absolutely certain that your company name won't attract lawsuits from other entities with a name that closely matches.
Branding is important for establishing a successful company, and your company name is an important part of branding. Your company could face huge losses if you have to change your name after you've already become established because of a lawsuit. Make sure your company name is absolutely original to protect your investment in your company.
Hiring the wrong people
Clients aren't the only people who file lawsuits against businesses. Employees also could be tempted to file suit against you if they're more motivated by making a quick buck than they are about growing a thriving company from the ground up.
When you're hiring employees for a new or growing company, look out for people with a strong work ethic and—most importantly—a genuine passion for your industry and company. You just may find that—in the long run—loyalty and passion are more important than credentials.
You can prevent liabilities down the road by making sure that a dedication to safety is built into your company culture from the beginning. Invest in creating safe facilities for employees and clients alike to minimize the chances that you'll face personal injury lawsuits.