3 Key Ways to Protect Yourself as a Small Business Owner in Canada
Kristin Hartigan
Bringing horses to water and making them drink (and come back for more) for 10+ years | Bridging the gap between Marketing & Sales | I help both sides find measurable results and learn to play nice with one another
Building & running a small business is an exciting journey, but it also comes with risks. As a small business owner, protecting yourself legally and financially is non-negotiable. Here are my three essential steps to safeguard your business and personal assets (based on plenty of personal, first-hand experience too... ask me about my stories sometime)
1) Incorporate Your Business OR Use a Limited Liability Structure
If you're operating as a sole proprietor, your personal assets (home, savings, etc.) could be at risk if your business faces legal or financial trouble. This is incredibly risky, especially as your small business maybe becomes not-so-small or you bring on a not-so-understand customer or client.
?? Incorporating separates your personal and business liabilities, giving you a legal shield in the event of a legal or financial issue
?? If applicable, consider a Limited Liability Partnership (LLP)—especially useful for professional service providers.
?? Tip: Work with an accountant or business lawyer to determine the best structure for your situation. I can not recommend this enough. Yes, we can Google things, but really, an expert is worth every penny of investment to ensure proper business structure from the start here.
2) Get the Correct Type of Business Insurance
Even the best-run businesses face unexpected challenges. Having proper insurance coverage can save your butt from long term financial disaster.
Common options include:
? General Liability Insurance – Covers accidents, injuries, and property damage claims.
? Professional Liability Insurance – Protects against errors, negligence, and client disputes.
? Commercial Property Insurance – Covers equipment, inventory, and business premises.
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? Cyber Liability Insurance – Essential if you store customer data or run an online business.
?? Tip: Work with an insurance broker to customize a policy based on your industry risks. Again, can not stress the importance of investing in working with a professional here on your initial set up and then occasional re-evaluation of insurance coverage.
3) Always Use Contracts and Legal Agreements
A handshake deal is not enough in today’s business world. Clearly defined contracts help prevent misunderstandings and legal disputes. This is especially true if you're selling/buying products or providing services in specific countries (looking at you, USA...)
Key types of contracts to have:
?? Client & vendor agreements – Clearly outline payment terms, deliverables, and responsibilities.
?? Employment & independent contractor agreements – Protects your rights and sets expectations.
?? Non-Disclosure Agreements (NDAs) – Keep sensitive business information confidential.
?? Tip: Always consult a legal professional before signing or drafting contracts. For the third time, investing in consulting a professional to help you set up the initial templates of agreements here is KEY. This will also you to build a trusted relationship with a law professional whom you can then consult with going forward as your business grows and changes.
Final Thoughts
Being proactive about legal and financial protection can help you build a resilient, long-lasting business. Don’t wait for problems to arise (as I did in some cases... ah to be 25 and an accidental entrepreneur again... actually NO. I wish I had a support network and professional resources back in the day, but did the internet even exist in 2006?)
?? What steps have you taken to protect your business? Drop your thoughts in the comments! ??
Business Owner at Interface Fire Defence specializing in Fire Protection Solutions
3 周This is sound advice, thank you for sharing.
Thank you, Kristin. I’m going to share this as is an important resource for new business owners or those contemplating starting a business for the first time. I’m going to share it with new business owners as a resource. Consulting with a lawyer and accountant are critical. Another consideration is whether or not you’re going to have employees and/or contractors. In both cases, it’s essential to have an employment lawyer’s help with contracts. Employment laws are always evolving so it’s helpful to have an annual check-in to ensure your contracts are current.