As a business owner, you assume a significant number of liabilities as part of your operations. These include current, long-term, and contingent liabilities, all of which put your business at risk if you can’t meet the financial burden they place on your company.
While some liabilities, such as payroll or business loans, are typical aspects of operation, contingent liabilities, such as lawsuits, are mitigated with the correct liability shielding in place.
What are Contingent Liabilities?
Contingent liabilities are potential risks your company faces as an operating business. The most common types of contingent liabilities are lawsuits and product warranties. Most companies face possible, probable, and remote contingent liabilities.
Possible contingent liabilities are those that may or may not occur, whereas probable contingent liabilities are likely to occur during the course of business. Remote contingent liabilities are risks that are unlikely but should be considered when planning your business.
The risk of these contingent liabilities is reduced by business organization planning and liability shielding implemented by a skilled business attorney.
What is Business Liability Shielding?
Liability shielding refers to legal strategies and structures that protect your business from potentially costly liabilities. Liability shielding protection includes:
- Business entity formation such as LLC, S-Corporation, or C-Corporation
- Operating agreements
- Holding structures
- Liability waivers
- Terms and conditions
- Liability insurance
Putting these liability shields in place better protects you from potentially devastating contingent liabilities.
Why is Liability Shielding Necessary for Business Owners?
Without liability shielding structures in place, your company is at risk. A lawsuit or partnership disagreement can result in the dissolution of your business and loss of company assets. If you are not protected correctly, you can lose your personal assets too.
It is essential to work with a skilled business attorney who can put legal shields in place to protect you from costly liabilities. Liability shielding can save your business from going under due to a lawsuit or partnership dispute.
Protect Your Business With Anzen Legal Group
If you are starting a new business or want to review liability protections for your existing business, contact Anzen Legal Group today. We can help you put liability shielding structures in place to ensure your company is protected from financial disaster.