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Business Owners Need to Protect Themselves Against Personal Liability

Posted by Blaier Law LLC | Jun 12, 2019 | 0 Comments

As a startup or small business owner, you have endless decisions to make for your company. One of the most important is how you can protect yourself from personal liability. While many business owners like the freedom of operating as a sole proprietorship, this business structure leaves your personal assets unprotected from your business liabilities. If your business struggles to pay its debts, your creditors may go after your personal assets.

Blaier Law LLC can show you the steps to take to protect yourself against personal liability.

Structure Your Business as an LLC or a Corporation

Forming an LLC, an S-Corp or a C-Corp protects your personal assets from your business liabilities. Each entity has its own benefits, drawbacks, and tax consequences, but having an entity in place is a great way of reducing your exposure to personal liability.

Contracts and Liability

Whether your startup provides goods or services, it needs strong contracts to limit your personal liability. An experienced startup and small business attorney can draft strong contracts that protect your assets. Using generic forms off the internet may not provide you with the protection that you need.

If one of your vendors presents you with a contract, your attorney can review it to ensure that you are not taking on any extra or unnecessary liabilities. By focusing on the money terms of the agreement (what you are receiving and how much you are paying) you may miss some language that significantly changes your liability profile.

Additionally, when signing a contract, make sure your entity is properly identified, including the "Corp","LLC" or other designation, the signature box includes your name & title and the word "By:" appears on/next to the signature line.

Liability Insurance

General liability insurance coverage will give you financial protection if you, an employee, or one of your products/services injures someone or damages property. An insurance agent can discuss the liability coverage that your business needs.

You may also consider purchasing a personal liability umbrella policy. This gives you extra coverage if someone files a claim against your business that exceeds your liability limits.

Document Your Business Dealings

Keeping excellent records for your business shows that your business is a separate entity. Documents you should keep include minutes from board meetings (if you're a corporation), all signed contracts, banking and financial information, as well as any other documents relating to your business. 

Co-mingling your personal and business finances blurs the line between what assets belong to you personally and which belong to your business. This co-mingling potentially subjects your personal assets to your business liabilities by "pierces the corporate veil".

Reduce Your Personal Liability With an Experienced Startup Attorney

Without the right guidance, you could face significant personal liability from your startup or small business's dealings. Blaier Law LLC is dedicated to providing your startup or small business with the best legal guidance to protect your personal assets while you grow your business.

Call Blaier Law LLC today at (848) 243-1148 or contact us online to learn how we can help your business today.

About the Author

Blaier Law LLC

About Blaier Law LLC: Dream big and big things will happen; dream small and small things will happen. Our attorney is a shining example of the American story and dream. He comes from a family with over 75 years of small business ownership and experience in the Tri-State area and Israel.

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Whether you need legal advice for your startup or small business, desire to protect your intellectual property, want a certain contract drafted, or need to meet the right people, Blaier Law LLC can provide cost effective legal counsel for all of your startup or small business needs. Give us a call today at 848-243-1148 or contact us online to learn how we can help you.

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