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Proactive Strategies to Prevent Fines and Lawsuits in Your Business

— June 22, 2022

Cyber liability is a growing concern for every type of business.

Risk management is integral to managing and developing a business. Here are some important things that you need to do to protect your business from legal and regulatory issues.

Keep Your Business Entity in Good Standing

Business entities such as corporations or LLCs must typically file annual reports in order to maintain their status as a business entity. Failing to submit timely reports could result in administrative dissolution of a business entity. If this occurs, a business would not be able to access accounts that are in the business’ names.

Reports are usually not very detailed, so they do not usually merit assistance from an attorney, although it is unfortunately common for attorneys to represent the process of filing annual reports as more complex than it really is. Make it a point to submit your annual report with the relevant department of the state where you incorporated your business.

Obtain All Necessary Licenses

Business operators may need more than one type of license. A local business license may be a requirement to sell products or services within a city or town. In addition, some types of businesses may need professional licenses. Real estate professionals and contractors in the construction industry, for example, may need to license their businesses separately from their personal licensure.

Get Professional Help With HR Compliance

In small and mid-sized businesses, complying with laws governing employer-employee relations can prove to be challenging. Wage and hour laws, for example, must comply with wage requirements at numerous authoritative levels including federal, state, and local provisions. Policies or practices that are not consistent with applicable standards can subject an employer to considerable liability and regulatory fines. Likewise, the miscategorization of personnel as full-time employees or independent contractors can be a common and costly misstep as well as insurance frauds examples.

Another area of employment law that employers need to be wary about centers around discimination and protections for workers. In addition to the liability that companies incur, they can experience irrevocable damage to both employer-employee relations as well as the company’s public image.

Utilizing a PEO solution is a cost-effective way to ensure that your HR management practices are compliant. By delegating key facets of your HR administration, you can mitigate the risk of violating your obligations as an employer.

Create an Employee Handbook

In general, it is advisable for employers to make employee handbooks to formalize policies and convey expectations to their workforce. Handbooks let people know about key policies that they need to be aware of in the performance of their individual job duties.

Establish a Grievance Policy

Employees who have a potential claim against a company may be able to attain appropriate recourse from an internal grievance procedure. If employees cannot seek a remedy from within an organization for an issue regarding mistreatment, they will be more likely to pursue a legal remedy by other means such as making a report to an authoritative agency or initiating an action in civil court.

Put Safety First

Man Inserting Earplugs
Man Inserting Earplugs; image courtesy of National Institute for Occupational Safety and Health via Wikimedia Commons,

The safety of employees and customers need to be a company’s primary priority. Policies, organizational structures, and safety training initiatives must all reflect an appropriate emphasis on a safe working environment.

Defend Your Business Against Cyber Threats

Cyber liability is a growing concern for every type of business. Work with experienced IT service providers to safeguard your business’ network against cyber threats. Your security policies in this area can protect your business’ data and your customers’ private information.


Lastly, it is crucial that businesses are well-organized financially. Their recordkeeping practices can prevent financial mismanagement by creating clear records that accurately represent revenue and costs. Records can be important evidence if investors or business partners make claims about fiduciary neglect or misconduct.

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