Running your own business can be fulfilling in many ways. You may enjoy having direct control over the work that you do, the clients you work with, the profits that you earn and more. However, there are also several risks that you face when you are a sole proprietor. Understanding what these risks are and exploring ways to mitigate your exposure to these risks is essential if you want to run a successful business going forward.
Take Advantage of Legal Services
If you run a one-man operation, you may be inclined to skip over some of the formalities associated with doing business. For example, it may seem like an unnecessary hassle to draw up contracts. However, a contract is a legal document that may protect your interests in many ways. Hiring a lawyer is a necessary step if you need business transaction law services, such as if there is a service or payment dispute that evolves into a legal matter.
Purchase Liability Insurance
Regardless of the type of work that you do, you may be exposed to liability risks in numerous ways. For example, a wedding photographer may be sued if he or she causes an accident while traveling to an event. An interior designer may damage a client’s home and be sued for damages. Liability insurance may cover at least some of your legal expenses as well as judgments and other costs in many of these types of possible situations.
Hire an Accountant
There are also financial risks associated with running your own business. Consider, for example, if you make a few financial mistakes with regards to tracking income or expenses. These mistakes may convey to your federal tax return. In the event that you are audited, you may face severe penalties associated with a major oversight. Hiring an accountant to manage your books is a great way to reduce your exposure to this type of risk.
As wonderful as life can be when you are your own boss, you also take on numerous risks by running your own business. Each type of business comes with its own set of potential risks. Therefore, it is important to analyze possible risks that you may face and to brainstorm preventive measures that may be effective for those situations. If you intend to use professional services, such as by hiring a lawyer or an accountant, select these professionals carefully after conducting thorough research. Remember that they will play a critical role in your operation going forward.