As an independent distributor of health and wellness supplements, how can I protect myself legally if there were ever any type of law suit in the future?

Would I be liable too?

Asked on August 19, 2015 under Business Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

1 Set up and run your business as a limited liability company LLC or corporation "inc."--and keep it separate e.g. separate bank accounts don't spend it's money on personal expenses from you. If you do this, you will enjoy substantial protection from business debts, since as a general matter, the owners or employees of a LLC or corporation are not liable for the business's debts or obligations, including those growing out of lawsuits.
2 Have adequate liability and umbrella insurance--a reputable insurance agent can guide you in purchasing this. Insurance is one of the best ways to protect from liability.
Note that you cannot protect yourself from all liability. For example, if you personally do something wrong and injure a person e.g. you are driving for business--even driving a business-owned car--and while doing so, drive carelessly and run into someone, you can sued for your personal wrongful action. If you fail to keep the business distinct from your own personal finances e.g. commingle them, a person suing you or other creditor might be able to reach past the protection afforded by the LLC or corporate structure called "piercing the corporate veil". And certain tax debts would fall on you personally.


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