Whenever you are in business with another person or you employ other persons in your business, you expose your personal assets to claims by parties that may be harmed by the actions or omissions of those other people. If not addressed before the liability occurs, the loss could be fatal to your business as well as damaging to your personal assets.
Some steps to take to reduce or avoid these risks include:
- Use a limited liability entity or corporation for your business and properly maintain it.
- Properly identify your business as an entity and that you are acting on its behalf.
- Acquire and maintain sufficient liability, property, auto and other applicable insurance.
- Provide that your business will indemnify and defend you from any loss.
- Prevent others from binding your or your business to obligations without your consent.
- Sign all documents in a representative capacity (i.e., “president”).
- Routinely audit your business’ financials, credit and performance, as well as its employees and co-owner’s activities.
- Control access to business funds, accounts, and credit.
- Protect financial, proprietary, trade secret, confidential and competitively sensitive information.
- Establish and enforce procedures to identify, report and address potential problems.
- Evaluate and replace risky customers, suppliers, contractors, employees, and others.
- Ensure partners, contractors and others have sufficient financial backing, insurance and funding.
- Require indemnity and sufficient insurance from all contractors and agents.
- Avoid or objectively evaluate potentially risky situations.
While all risks of business operation cannot be eliminated, prior planning may avoid many and lessen the harm of those you can’t avoid. If you have any questions or if we can help you protect your business or personal assets, please contact us.
This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting, or other professional advice. If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.
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