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What Legal Protection Does a Small Business Need?

What Legal Protection Does a Small Business Need?

In today’s landscape, it’s easier than ever to launch your own business. If you’ve got access to a computer and internet connection, you might assume you have everything you need to start trading. However, many small business owners don’t realize how vulnerable they are to civil lawsuits and even criminal charges. To ensure your business venture doesn’t end in disaster, take a look at these three types of legal issues that could affect you.

General Liability

Sometimes known as public liability, this refers to your culpability if a customer, client, or member of the public is injured due to your business operations. If a customer slips on a wet floor, for example, you could face a civil claim and be forced to compensate them for their injuries. Commercial general liability helps to protect you against these claims and can ensure you won’t have to fund the cost of a compensation payout yourself.

It’s worth noting, however, that commercial general liability insurance doesn’t extend to employees. To get cover for claims made by employees, you’ll need a separate insurance policy.

White Collar Crimes

You might have no intention of committing a white-collar crime, but this doesn’t necessarily mean you won’t find yourself charged with an offence. Unfortunately, new business owners often fall short of financial reporting regulations, which can lead to an inadvertent infringement of the law.

Consulting a tax adviser and working with accountants or bookkeepers can prevent this from happening. However, if you’re charged with an offence or if you believe you’ve inadvertently breached the regulations, it’s advisable to contact a fraud lawyer. By doing so, you can deal with the situation head on and try to achieve a positive outcome.

Professional Indemnity

If your business involves giving people advice or instruction, you need to be sure that the advice you’re giving is based on accurate information and is appropriate in the circumstances. If you’re licensed to give investment advice, for example, but you do so incorrectly and a client loses money, they may start legal proceedings against you.

Professional indemnity insurance protects you and/or your business in such instances. In the same way that general liability insurance can cover the costs of an injury-related lawsuit, professional indemnity insurance can cover the cost of civil claims relating to loss or damage caused by inadequate advice. Although not every business needs to be protected by professional indemnity insurance, it’s well worth finding out whether your firm could be subject to professional indemnity claims.

Protecting Yourself and Your Business

The business model you choose will affect your personal liability in relation to claims against your business. If you’re a sole proprietor, for example, your own finances can be taken into account when claims are made against you. In contrast, forming a corporation separates your finances from the company’s and offers some level of protection.

However, anyone can face criminal charges for white-collar crimes, regardless of whether you’re a sole proprietor, business partner, or a director of a corporation. Due to this, it’s important to ensure you get the right professional advice and implement effective processes so that the financial management of your business isn’t called into question.

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by Brian Perry // Brian Perry is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.