Whether it is a recent startup or a business that has weathered the past two years of recession and uncertainty, the challenges of minimizing liability are always present for Florida business owners. Knowing where to look for potential risk can prevent legal headaches later on.
Along with the choosing the appropriate entity formation, it is also important to have a trusted legal resource close at hand to review or draw up solid contracts that keep partnerships healthy, as well as resolve conflicts when they arise. As businesses in St. Petersburg and surrounding areas function through relationships both within and without the organization, minimizing legal entanglements is a priority.
What are areas of greatest risk in a company?
Business relationships involve not only customer and employee relations but also the actions and practices of executive leaders, shareholders and business partners. Risks that may arise in these areas include:
- Customer claims of false advertising, violations of privacy or information protection, or civil lawsuits
- Discrimination or unfair hiring practices from employees
- Ethics violations or regulatory noncompliance by executives or senior members
- Tax exposure which may occur when leaders make decisions that are out of bounds with the organization’s tax code
- Breach of contract claims
In addition, the choice of business structure can either expose the company to liability or provide tax advantages. Sole proprietorships and partnerships, for example, create the greatest personal and tax liability, while corporations and LLC’s offer more protection.
What measures can the business owner take to minimize liability?
Getting insured is a wise first step toward safeguarding a business against liability claims, as is having legal advice on all matters of operations. It is essential to take inventory of areas of potential risk, especially in current law, ethics, current market climate and regulatory compliance issues.
Solid business contracts form the bedrock of any company, so it is important to perform a regular review of them to make sure they continue to serve the needs of the business. Reviewing current policies and practices within the organization and making sure to articulate these through employee handbooks that include code of conduct provisions and disciplinary actions, will provide a measure of security when violations do occur.
Finally, seeking dispute resolution options when conflicts do arise can keep issues out of the public arena and prevent unwanted attention from damaging the organization’s reputation.