If you're a business owner, hiring and managing employees has probably caused you more than a sleepless night.
One of the most common questions we get is:
How can I protect myself when I'm hiring employees and growing my business?
Here are five ways you can protect yourself, two of which may surprise you.
1. Make sure you have the right insurance.
General liability insurance is a must, but there are other types of insurance that can protect you as a business owner. In Pennsylvania, workers' compensation insurance is often required. You may also want to consider employment practices liability insurance (EPLI). There are many different types of insurance available, so work with a legal team and a good insurance broker to make sure you have adequate and accurate coverage.
2. Have good contracts in place.
This could include employment contracts, employee handbooks, or documented policies and procedures. If these documents are properly drafted, they can help protect you from liability created by your employees. However, if they are not drafted correctly, they could actually create additional liability for you and your business.
3. Choose the right entity type for your business.
Running your business as a sole proprietorship can expose you to a lot of liability. If you have an LLC (limited liability company) or a corporation, you can add a layer of protection. However, it's important to make sure that your entity is formed properly. If it's not, you could create additional and unexpected personal liability.
4. Manage your cash flow effectively.
This may seem like an odd tip from a lawyer, but it's important. If you have money in the bank and positive cash flow, you'll be able to resolve problems more quickly and efficiently. When cash is tight, business owners often start cutting corners, which can lead to even bigger problems down the road.
5. Be careful who you do business with.
No matter how good your insurance is, how bulletproof your contracts are, or what type of entity you have, you can't be protected from bad people. Do your due diligence and make sure you're dealing with good people. This includes doing a Google search, running background checks, and checking references.
If you'd like more information on how to protect yourself and your business, please reach out to us today. We've seen these problems arise, and we can help you avoid or solve them.
