Risk management: the Top 4 consulting firms on the planet have entire floors in every country dedicated to exactly that – managing risks. Your business may have the best intentions, but things can go awry; even if you keep your shop tidy someone will claim you weren’t following WHS. A client may be delinquent on their payments and cripple your cash flow. Someone online gets a bee in their bonnet and takes you down on social media.
Whatever it is, you need to protect your business as best you can. Here are some tips for protecting your business – even if you’ve been operating for a while.
Setting up dual company structures
A dual company structure is suitable for a firm that deals with intellectual property because it allows the corporation an additional layer of legal separation between its two main assets; cash on hand and intellectual property – as well as other assets. This does cost more than just obtaining your ABN/ACN and setting up shop: but there are several advantages in terms of reducing risk and increasing flexibility. Whatever it is, you need to do everything you can to safeguard your company and having two separate entities with trustees may be a solution.
Having a good accountant and lawyer
Tax is inevitable – and getting it wrong can cost you dearly. Having an accredited, licenced, and reputable accountant is worth their weight in gold. Setting up weekly, monthly, or quarterly reports can show you and your shareholders just what’s happening in the business and shore up any impropriety as it happens. If not for your own peace of mind – but your employees and investors.
Likewise, you should have a lawyer that you can call on for business matters – on occasion, you may have to take legal action to recover a debt, rectify a civil wrong (tort), or have a default upheld. On the flip side, you may need a lawyer if any of that happens to your business. Which brings us to the next must-have for risk management – professional indemnity insurance.
Professional indemnity and public liability insurance
If you’re a professional and you make a mistake that upsets a client and they aren’t satisfied with your fix, you open yourself up to legal action.
If you run a retail or wholesale business and a member of the public injures themselves, they may want to also take you to court.
These legal actions could scupper your business and leave your reputation in ruin if you don’t have insurance to back you up. As a result, you should seek professional indemnity insurance.
That means you’re covered if you find yourself in a precarious legal position due to negligence, miscalculation, defamation, and so on.
General business insurance
Above and beyond indemnifying yourself, you should also have other kinds of business insurance. If you have employees, you are compelled to pay for Workers’ compensation insurance as a matter of course; if you own a business vehicle you need to pay for third party injury insurance.
If you are a sole trader, you may want to consider Total Personal Injury or Income Protection Insurance if you are suddenly unable to work. If you’re unsure, you may want to consult your State or Territory business affairs department for advice.
The advice here is general in nature. Consult a legal professional before taking out business insurance products.
