Canadians operating businesses in the US must be aware of the American legal landscape, which is far more litigious than the Canadian one. Lawsuits can be lucrative, with businesses subject to paying crippling amounts of money should they be sued. In certain circumstances, business owners may also be personally liable for business-related liabilities. Business owners in the US therefore need a strategy to protect both their business and personal assets.
Creating a business structure such as an LLC, S corporation, or C corporation is one way to protect your personal assets from becoming embroiled in a lawsuit. However, these structures don’t offer total protection from personal liability; for instance, if your personal actions or negligence cause injury to a customer, the corporate veil will not protect you. Purchasing professional liability insurance, or errors & omissions insurance, can be a helpful strategy for increasing your liability protection even when you operate your business within a corporate structure.
General liability insurance is also an important option to consider for US business owners. This type of insurance protects business assets in case a lawsuit arises as a result of the regular operations of the business, such as an employee getting injured at work.