Statistics reveal that 36% to 53% of small businesses face at least one litigation annually, while 90% of all businesses face legal issues at any time. Indeed, lawsuits can be detrimental to your small business. They can drain your finances, time, and other valuable resources, which can be disastrous if you work with a limited budget. Likewise, they can damage your business’s reputation, causing customers and potential investors to avoid dealings with your brand. That said, how can you avoid lawsuits? Here are some smart ways to go about it.
1. Make use of written agreements
Indeed, business dealings involve two or more parties, and agreements must be made to facilitate them. However, conducting transactions with verbal agreements alone can be a risk not worth taking. It’s easy to believe that other parties are trustworthy, especially if they are well acquainted with you. But, when things go sour, and one party breaks the agreement, you’ll not have proof to defend your interests. What’s worse, taking the case to court may prove grueling, as you have nothing to make a case with. Therefore, it’s important to leverage written agreements for the best results.
A written agreement is a legal document that summarizes the agreement between you and your partners or customers. It is legally binding, as it contains the parties’ signatures. Not only does it provide certainty, but it is solid proof during disputes. Moreover, the terms and conditions, rights, and obligations are included, protecting you and your associates. It’s important to work with professional attorneys such as CrimLawCanada to draft a valid written agreement and ensure that all the important details are included.
2. Ensure that your paperwork is up-to-date
Business documentation is important for every organization. It helps you monitor your business’s progress, identifying what products are customers’ favorites. What’s more, your business records are instrumental in preparing accurate financial statements and dealing with creditors, debtors, and banks. Likewise, you can stay ahead of your tax payments and avoid legal issues with the Internal Revenue Service. It’s essential to keep your documentation current to maintain its validity and optimal efficiency. Also, ensure that they are updated when changes are made. Fortunately, you can work with professionals to perform this task if you don’t have the time to. For instance, hiring a professional accountant to handle your business tax documents will prove helpful, so keep this in mind.
3. Protect your products or business ideas
If you’ve come up with an innovative product or business idea, protecting it from your competitors makes sense. However, your competitors can come up with a similar idea. Research indicates that approximately 12 000 intellectual property theft cases are filed annually. Moreover, defending a patent lawsuit can exceed $3 million. That said, how do you protect yours and avoid lengthy lawsuits? You can achieve this by registering patents, copyrights, and trademarks. It’s also prudent to register your product names and create confidentiality contracts for your partners and employees. Avoid joint ownership, as it gives your other partners the right to do whatever they wish with your ideas or products.
It’s not unusual for businesses to face lawsuits. If you find yourself in this situation, it’s advisable to work with reliable legal professionals for the best results.
