What Are You Liable For as a New Business Owner?

Businesswoman with Packages Talking on the Phone

Most owners think about liability at one point or another, but it’s possible that with everything else that goes into starting and running a company, this detail has slipped through the cracks. Certain businesses are more obviously liable than others. For example, if you run a daycare center, premises liability is likely one of the first things that crossed your mind, as according to Lane and Lane, any property hazard that can leave someone injured, whether it is a dangerous dog or a slippery floor, can be grounds for a case. Liability is going to be something important to learn about, no matter what type of business you own, so here are some things that you should know about liability.

Company Structure Determines Liability

There are all sorts of ways to structure a business. If you don’t create a specific structure, you’ll be considered either a sole proprietorship (if you’re a company-of-one) or a general partnership (if there are more than one owner). When you have this type of company, there isn’t a separation between owner and company, which means that you are personally liable for anything that happens.

You Can Protect Your Assets

Even small businesses should protect their personal assets. If you end up facing a creditor judgment, it could put your assets at risk for up to 22 years. Even a company that doesn’t bring in a lot of money per year is at risk. When you separate your personal and company assets via a formal structure, like a corporation or LLC, you’ll protect the rest of your life.

Formal Company Structures Don’t Protect You From Everything

Even if you do have an LLC, your personal assets may still be at risk in particular situations. For example, let’s say you need to get a business loan. You’ll need to personally guarantee that loan, which means you’re responsible for it. Another example is if you sign a business contract and you use your name instead of your company name, you’ll be personally liable. You also won’t be protected by an LLC if you end up committing a crime as you run your company.

Creating a Distinction Between Personal Life And Professional Life

The best way to protect yourself personally is to always keep a distinct, visible line between your personal and professional life – and anyways, you should be keeping a balance between these two in the first place. Keeping your company in good standing can help ward off any personal lawsuits. One of the best ways to keep your company in good standing is to always stay on top of your annual fees and filings.

There are a lot of fears involved with being a new business owner, and overcoming it isn’t easy. Liability can definitely fall into the basket of the many fears you might be having, but having clear knowledge and being cautious about these issues will help you overcome them and protect yourself.

Categories

All Categories

Business Operations

Entrepreneur Interviews

Marketing, Networking, & Social Media

Self Care & Personal Development

Working Moms

Business Software and Technology

Entrepreneurship & Small Business

Organizing Tips

Sales

Career Building

Family Businesses

Inspiration

Starting Your Own Business

Work-Life Balance

Communication

Hiring Help

Management & Leadership

Time Management & Priorities

Women in Leadership

Recent Posts

How to Protect Your Merchandise From Theft

How to Protect Your Merchandise From Theft

Protecting your merchandise from theft is a critical aspect of running a successful business. In a world where security threats are ever-present, safeguarding your inventory is essential. Not only does it protect your bottom line, but it also ensures the safety of...

Experts You Need to Have at Your Business

Experts You Need to Have at Your Business

In the dynamic world of business, having the right team of experts is not just beneficial; it is essential for success and growth. For female leaders who are carving out their paths in business, marketing, or HR, knowing which experts to have on board can make a...

7 Tips for Asserting Yourself as a Woman in a Medical Workplace

7 Tips for Asserting Yourself as a Woman in a Medical Workplace

As a woman in a medical workplace, you have a lot of responsibility, not just to yourself but to other women who will come along after you. Asserting yourself in your workplace and gaining the respect of other employees and leadership is essential to a successful career. You have worked hard to get where you are, you don’t want to lose momentum.

Continue to grow with online leadership training and more. Follow these tips to assert yourself in the medical workplace.

Want To Sell Property Fast?  Do These 5 Things

Want To Sell Property Fast? Do These 5 Things

Mike Johnson is a freelance writer and human rights activist and enthusiast. Through his extensive research and commitment to the field of law, Mike has established himself as a well-decorated writer in this field. Mike currently settles in Las Vegas.

Generations of Success: The Unique Charms of Family-Run Home Businesses

Generations of Success: The Unique Charms of Family-Run Home Businesses

The blog celebrates the heartwarming essence of family-run home businesses. It delves into their special qualities: the personal touch they offer, the deep expertise passed through generations, the cozy and inviting atmosphere they create, their integral role in the community, adaptability, genuine passion, meticulous care in crafting goods, and the captivating stories woven into their existence. Supporting these businesses isn’t just about transactions; it’s about nurturing the soul of our communities, preserving traditions, and embracing authenticity in a world that sometimes feels distant.