A Few More Ways to Protect Your Business
You’ve formed your LLC or corporation. We’ve talked about how to avoid piercing the corporate veil. What else can you do to protect your business and yourself?
1. Insurance is usually the cheapest way to protect your business. Be strategic about it. Figure out what risks you have that insurance can cover, and get an appropriate amount. I am a big believer in umbrella coverage as well. If you are just starting out, talk to the agent who handles your car and home insurance (personal lines). Don’t be surprised if they don’t have expertise in commercial insurance or their company won’t handle your type of business. Ask them for a referral or ask me.
2. Have a good form contract for your business. Think about what might go wrong and how you can protect yourself. It is worth a few bucks now to get a good contract in place.
3. I highly recommend a payroll service, even if you only have one employee. They calculate, collect and pay all your payroll taxes. They prepare and file the quarterly forms. Best of all, if there is a mistake, they spend hours on the phone with the IRS or the Department of Revenue to work it out, and pay any penalties and interest. This is valuable, even if you are the only employee.
4. Do your due diligence into new suppliers and new customers. Search them online to see if they have a good reputation. You would never hire an employee without a reference check, so why would you obtain mission-critical supplies from an unvetted vendor? Wouldn’t it be nice to know up front if your prospective million-dollar client has a history of suing its service providers? Your attorney can see if they are litigious or have a lot of liens.