Setting up and operating a new business takes all the time, energy and devotion you can muster.
Hard work brings gratifying achievements, but what happens if a lawsuit arises? How do you protect yourself and your new company?
It is important to understand your personal liability. Depending on the structure of your new business, separation may exist between you and your company, in which case there is some protection for your personal property. However, if you are a sole proprietor, your income and savings, and your business itself are at risk in the event of a lawsuit.
Look into insurance options that can offer protection for you and your business. Examples include Employment Practices Liability Insurance (EPLI), Directors and Officers Insurance (D&O), Commercial General Liability (CGL) and even Environmental Insurance. If you have at least five full-time employees, the state of Utah also requires you to carry workers’ compensation insurance.
If litigation is on the horizon, the first step is to contact your attorney. Next, you must initiate a litigation hold. This means you must identify the people and the information, both hard copy and electronic, that relate to the lawsuit. Make sure that no one destroys pertinent documents or the court might impose penalties that could harm your business.
Prepare for possible litigation by developing professional relationships, especially with an attorney who can come to your aid if you become the defendant in a lawsuit. Having the help of an advocate who understands the business climate and the disturbances that can occur will give you peace of mind and allow you to focus on the growth and well-being of your new company.