Every business owner needs to think about lawsuits and potential liability as part of their overall business planning. If you have a business, you will want to have risk management strategies and techniques in place to reduce your exposure to liability. This planning begins when you decide what type of business entity to create. Creating a corporation or limited liability company shields the business's owners from personal liability for business debts. Partners and sole proprietors, on the other hand, are 100% personally liable for any business debts. Protecting yourself personally through the type of entity you create does nothing to shield your business, however. So no matter what type of business entity you create, you will want to analyze the type of risks your business and its owners, employees, officers and directors, or others face.
You will want to spend time figuring out what types of insurance coverage you need for your business. Not all businesses have the same coverage because of the different risks involved with every business. You'll want to analyze your situation and put together an insurance coverage program that meets your needs.