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Small businesses need to protect themselves from lawsuits

When starting a business in Ohio, there are a lot of decisions to make, and owners have many hats they need to wear. One thing to keep in mind is to set up a good employee culture from the beginning and to put steps into place to help prevent employees, clients or vendors from suing.

Investopedia discusses certain tips to protect a company from facing litigation. When starting a business, it is a good idea to choose a formation that protects the owner's assets in the event someone sues. One may choose to open a trust that owns the business, or the owners may choose to incorporate, and this keeps personal finances separate from the company's. 

It is also important to insure a business properly. Liability is necessary for almost all businesses, as this helps in the event a client or employee sustains an injury due to something on the property. Depending on the specific type and size of a business, other possible types of insurance coverage are directors and officers liability and errors and omissions.

Both the owners and employees should be careful how they project the business to the public. This means avoiding making overly specific claims about services or products or saying anything questionable.

Employees are commonly the ones who bring forth a lawsuit, and Inc. outlines some ways to prevent this from happening. Some rules and laws employees must follow include:

  • Pay overtime for nonexempt employees
  • Ensure employees never work off the clock
  • Follow discrimination laws
  • Base pay on market demands and job requirements

Business owners who do not follow employment laws may also face fines and other penalties from the government along with employee lawsuits.



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