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7 Ways to Stay out of Legal Trouble

Excerpt from Editor, Dan Kehrer of Business.com

 It seems as though every time you turn around, you see another fellow business owner being sued for one reason or another. Lawsuits are getting out of hand, and small businesses are suffering.  Anyone is wise to be concerned.  The road to entrepreneurship is filled with legal potholes. "With the dramatic rise in the cost of lawsuits, many small businesses fear even the possibility of being sued," says Elizabeth Gaudio, senior attorney with the National Federation of Independent Business (NFIB) Legal Foundation.

A new study by the NFIB - America's largest small business advocacy group - found that the median cost to settle a legal dispute for a small business is about $5,000. "Considering that the average small business owner's salary is less than $50,000 a year, it's easy to understand the economic pressures to settle," adds Jack Faris, president of NFIB. "Business owners say being sued is one of the most threatening experiences they encounter - especially for the smallest firms that could be put out of business by one frivolous lawsuit."

Don't just hope legal troubles will pass you by. Develop a strategy to ward them off.  Here are some tips on how to do that from Gaudio of the NFIB Legal Foundation:

Go corporate. By incorporating your business, you can protect personal assets and limit any liability to your business assets. Make sure you follow corporate procedures and have an attorney or accountant review your records yearly.

Know the law.  Ignorance of the law is no defense, and a good way to get into legal trouble. Focus on these areas: employment law, health and safety law, tax law and environmental law. Make sure employees are well trained and aware of discrimination laws. Safety laws affect nearly all small businesses, regardless of the number of employees.

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