Business Lawyers Blog
Every Texas business faces the risk of lawsuits, regardless of its size and scope. Various factors can lead to potential legal challenges, such as a customer claiming a breach of contract or a former employee alleging discrimination. However, businesses can take specific measures to safeguard their owners and assets. The skilled business litigation attorneys at Structure Law Group in Texas can offer detailed legal advice and representation suited to your unique circumstances.
Structure Your Texas Business as an LLC or Corporation
Many Texas businesses start as a sole proprietorship or general partnership. While such structures are simple and inexpensive to set up, they offer no legal liability protection in case of a lawsuit against the business. To put it bluntly, if you are a sole proprietor, any business creditor can come after your personal assets–including your home–to satisfy a business debt.
This is why most businesses choose to incorporate. Organizing your Texas business as a limited liability company (LLC) or corporation creates a clear legal separation between yourself and your business. Any lawsuit against the LLC or a corporation will not affect your personal assets, as long as you observe all necessary legal formalities.
Commercial General Liability Insurance
One tool to help protect your Texas business against the risk of lawsuit-related losses is to purchase a commercial general liability (CGL) insurance policy. CGL insurance covers the business in the event of personal injury or property damage on the business premises or arising from business operations. For example, if your company owns its building and someone is injured in a slip and fall accident, CGL insurance would cover any personal injury liability.
There are other types of business insurance you may need to purchase depending on the nature of your business. For instance, you may require an excess liability or umbrella policy to cover losses beyond the limits of your CGL insurance. If your company produces a physical product, you may need separate insurance to cover any damages that occur off-premises due to a defect in the manufacturing process.
Use Written Contracts Whenever Possible
While many like the simple and old-fashioned idea of negotiating business agreements with a handshake alone, in the real world, such oral contracts offer limited protection in the event of legal action. That is why your Texas business should employ written contracts whenever practical. This does not mean you need a detailed, 15-page agreement for every customer sale. But you should have some form of written purchase order–even an email confirming a prior oral agreement–that you can point to later in the event of a dispute.
Work With an Experienced Texas Business Litigation Attorney
Ultimately, the best protection against a potential lawsuit is to be proactive. Among other steps, you should work with an experienced Structure Law Group Texas business attorney who can advise you on the potential traps to avoid as you continue to develop and grow your business. Contact SLG today at (512) 881-7500 to schedule an initial consultation.