Reducing Business Relationship Liability Risk
Those new to the business world often lack the first-hand experience of initiating and building healthy business relationships. But protecting these vital relationships with carefully crafted business agreements—such as those for co-owners, suppliers and clients—is essential to growing a new business without risk of being taken advantage of or of burning valuable bridges. To decrease liability risk in your business relationships, here are three of the most common agreements that every business owner should have customized and ready to go.
3 Business Agreements That Will Decrease Your Liability Risk
1. Owner Agreements
No matter how your business is structured, you need comprehensive owner agreements if you have co-owners, founders, shareholders or partners. Mistakes get expensive if you don’t have solid agreements between the owners when something goes wrong. Agreements should outline the terms and conditions applicable if one owner wants to go his or her separate way. Putting everything in writing will allow you to focus your energy on growing your business instead of on arguing about who said what, when and who was going to do what on which time frame.
2. Worker Agreements
Team member agreements protect both parties – you and them. These include agreements for independent contractors (think web developers and graphic designers) to clarify the terms and conditions of the work, and who owns the work they are creating as well as employees. Hiring with complete agreements – in writing – will ensure you are both on the same page regarding employment status, performance expectations and job requirements. Although you should have agreements for both employees and independent contractors, make sure you clearly distinguish who is in what role. You could face tax and other penalties if you improperly classify a worker.
3. Customer and Vendor/Supplier Agreements
Your customers make your business possible, especially when you’re just starting out. Every sale is essentially a contract between your business and your customer, so make sure you are putting the proper legal protections in place. Terms of service and privacy policies will do some of this work for you, but make sure you consult with a lawyer to determine the specific clauses you need in your client/customer agreements to provide the most protection for the relationship long-term.
Your vendors and suppliers make your customer base possible. They help you meet demand and are instrumental to your business’s viability. Your vendor and supplier agreements should provide both parties with legal protections and make sure your needs are met by the relationship. Vendor and supplier relationships can make or break a new business’s success, so make sure you fortify them with clear, detailed agreements.
If you want to protect your business interests and limit your liabilities, start by sitting down with a lawyer. We are experienced in helping entrepreneurs achieve success through careful financial and legal planning. As your lawyer, we can establish a sound legal, insurance, financial and tax system for your business so you can focus on increasing revenue and enjoy the benefits entrepreneurship.
This article is a service of Kundani& Chang LLP. We are an award-winning law firm that specializes in business and estate planning for clients like you. The goal for every family is to stay educated on all topics like this, avoid probate, avoid estate taxes, and build a legacy for you and your loved ones. What sets our firm apart is that we build lasting, lifelong relationships with our clients. They rely on us to keep them updated, provide sound legal counsel, and be there for them immediately if any problems should ever arise. The best part is we don’t charge hourly fees to our families, so you never have to worry about speaking to us. If you’re ready to keep your family out of Court, contact us today to schedule an initial consultation or visit our website at www.bridgelawllp.com.