They can be even more scary for a business owner because one claim could have the potential to put the business in serious financial trouble or even cause the business to shut its doors.

While there is really no way to prevent your business from being sued (after all this is America, and in particular, California), there are some simple, costs effective steps that every business can and should take to minimize this risk.  We love our local businesses here in San Diego, and we want them all to be strong enough to weather any storm that may come!

  1. Form an entity

Forming an entity has many great benefits for you and your business, but from a liability perspective it is a no-brainer!  Creating an entity separates your business from you as a person.  This means that if your business is sued, then your business is responsible for any judgment or settlement, not you personally.  While it can’t prevent a lawsuit from being filed, it gives you a layer of protection to keep your personal life, assets, and finances separate from any claims against the business.

  1. Get a lawyer drafted contract

Taking the time to build a contract that is custom to your business is essential, especially if you are in a serviced based industry.  It is an opportunity to not only protect yourself from lawsuits from others, but give yourself recourse to protect your own legal rights within the transaction.  Simply pulling a sample contract off of Google, or using someone else’s contract is free, but it means you will not get the protection you need.  The question is always, if you think your service or product is unique and custom, then why do you not have a custom agreement to protect it?

  1. Get business insurance

Insurance is a great thing, when it is used correctly.  Insurance does not prevent lawsuits, but it does pay for them when you need it.  The best thing you can do isa find an insurance agent you like and USE THEM!!  They are paid by the insurance company, not by you and they can get you really solid coverage.  Good insurance has the potential to save your business.