4 Liabilities Every Small Business Owner Should Know
Owning your own business can be a very liberating experience. You get to be your own boss and have complete control over all the decisions that are made. You get to make your own hours and have so much more freedom than someone who has to report to a higher-up. But as exciting as being a small business owner is, it always comes with its own set of responsibilities, one of those being certain liabilities. Since you have complete control over decisions, you also have to take into consideration the possibility that things might go wrong. And when there is no one above you to report to, you have to take full responsibility for them.
When you run your own business, you always run the risk of being sued if something did not go as planned and it is important to be prepared just in case that happens. Any small business runs the risk of encountering legal business liabilities. Here are 4 liabilities every small business owner should know:
One of the biggest ways a small business becomes successful is through word of mouth. A customer likes a service or product they received and they then tell all their friends and family about, thus leading to your success. Having a good reputation is extremely important, and damaging a business’s reputation can be a cause for legal action. This can go either way: a customer can talk badly about your business, or you can talk badly about a customer. Both are damaging to one’s reputation and a liability to be sure to avoid. It’s not a bad idea to get reputational risk insurance to protect your business if this situation happens.
- Accidents And Injuries
No matter what your small business is, there is always a risk of an accident or injury. Whether you provide a service or a product, if a customer gets injured while using it, there is a good chance you will get sued. Handling this type of situation can also be extremely expensive. Claim handling costs include adjuster’s fees, courts fees, and more. For situations like this, it is best to get assistance with medical claims processing with a service that will help provide better claims outcomes. Save some money on your end and use a service like Mitchell to help.
- Error and Omissions
There will likely be many times in your small business when you make a mistake or forget to do something. Most of the time, there probably will not be any serious repercussions of the mistake. However, there is always a chance if you make a big enough mistake that it will create a legal liability. It is important to be extremely careful with your business, but mistakes are just inevitable. As such, you should be prepared with error and omissions insurance that will cover this specific situation.
- Intellectual Property
This is a very common liability for small business owners. There are four different types of intellectual property, including copyrights, patents, trade marks, and trade secrets. An example of intellectual property could be something as small as using a copyrighted song in a YouTube video and being sued by the artist, even though you didn’t realize the song was copyrighted. It happens, so it is important to be protected and prepared just in case. If you are creating anything, be sure it gets protected with copyright/trademark registration or a patent.
While being a small business owner has its perks, it also means having to take into consideration that any liability can occur at any time. We are humans and making mistakes is in our nature, but sometimes those mistakes can lead to legal issues, which complicates things. In general, it’s better to be on the safe side and be protected with the right insurance. If you are thinking of starting your own business, make sure you take the time to research various liabilities you may encounter during your journey.