how you can protect your business plan

Startup Knowledge Base

The most complete information site for startups

How to protect a business idea: the 4 types of protection

In recent years, there has been an increase in interest in entrepreneurship . Consequently, there is much demand for innovative ideas able to create something of value to society and to generate a good financial performance. What many of these do not know is that when they are faced with a business idea Must protect it at all costs. Yet, startups still struggle on securing an idea .

Entrepreneurs should understand the basic principles of Intellectual property (PI) for protect your ideas aggressive competition. This is suitable for all companies, regardless of their size or the sector in which they are embedded, whether technology is a more traditional industry.

The rights of intellectual property They can be about a brand, logo, corporate identity, products, services or even processes that differentiate the commercial offer. These are the most valuable assets that a company can own.

Today, almost all companies bet and benefit from communication marketing digital in order to get their products to a huge audience and at relatively low cost, which in a more traditional method would be impossible. But also increases the likelihood of business idea be stolen by third parties. That's why the intellectual property protection It is essential to the success of business and entrepreneurs should understand their rights, duties and securing an idea .

Importance of intellectual property

As already mentioned, intellectual property It plays an essential role for the business success. Especially in the case of a startup where innovation of the idea and the risk on investment and success of this are united. Of the various advantages that this protection features, it highlights the following:

Is the exclusive right by preventing third parties to produce, manufacture, sell or to economically exploit the developed solution, without the permission of the holder;
Facilitates business growth as this is protected legally impossible competition to adopt the ideas;
It demonstrates the commitment of entrepreneurs for their ideas;
Values the investment for the development of products or services;
It allows for differentiation from competitors by offering customers something new and innovative;
It generates money by selling or licensing the product or service;
Transmits security, credibility and commitment to the customer by the holder.

At first glance, this process protection of their ideas It can seem quite complex and complicated, leading to many entrepreneurs ignore this step. However, it is simpler than it appears and is an asset to any company or entrepreneur, worth the time and effort devoted.

The good news is that there are certain rights intellectual property which are automatically protected by law. However, there are also other types of protection cool that the entrepreneur should ask.

When starting a business you need to confirm that there is no longer patented. This process avoids having to deal with the possibility of proceeding by the holder. Similarly, you must verify that the intellectual property your idea is not being violated. It is up to the entrepreneur to exercise since no one else will do it.

Next are listed the types of protection existing and steps securing an idea .

Types of protections

The kind of intellectual property protection an entrepreneur or business can get depends on the setting in question. Thus, it is necessary for them to decide which of his ideas fall into which of the options available and that action is taken as soon as possible in order to reduce the likelihood of losing protection .

There are four main types of business ideas protection : Patent, trademark, copyright and design registered.

If the entrepreneur is facing an invention may consider protect it with a patent. A patent grants property rights to an invention, new products and innovative processes. That is, this gives the holder the right to prevent others from making, using, importing or selling these without your permission.

This type of protection It is granted by the government, making the idea of property holder. Usually remains in effect for 20 years, should be renewed regularly. It also allows the holder to license third parties to use their invention, generating royalties (periodic payment to the holder for the use of the product or service) thereby providing an important source of revenue for your business.

There are three main types of patents of which the entrepreneur must learn about how to protect a business idea in these circumstances:

Patent utility

It is the most common type of patent that entrepreneurs and companies seek. It covers any process, machinery, material composition, articles of manufacture and new and useful improvements. Processes refer to any industrial or technical acts or methods of doing something, machines include objects that can be considered machines (such as a computer), compositions of matter are basically chemical compositions including a mixture of ingredients or new chemical compounds and lastly, articles of manufacture are goods that can be manufactured or manufactured.

The holder to apply for a utility patent, as indicated by name, must have a breakthrough with some useful, novel and non-obvious. Ie, it may not be immediately obvious to anyone with basic skills in the same industry. This patent lasts up to 20 years where the holder during this period may have to renew it.

Design patent

The design is defined as the ornamentation of the surface of an article of manufacture, whether the shape or configuration of this. For this type of patent, the design should be separable from the article since it only protects the look of this. For to protect the other aspects, such as structural or functional features, the holder should look for a utility patent. These patents last for 14 years and are notoriously difficult to investigate because the documentation is mostly done in the manufacture of the article pictures or drawings. That is, the entrepreneur should seek help on securing an idea through such patent.

Plant patent

This type of patent, as indicated by the name, is intended to protect plants and any new and distinct variety of plants. In order to apply for this protection , The plant can not be propagated by tubers, it can not be found in an uncultivated state and can be reproduced asexually, to ensure that the holder can reproduce the plant. The plant patent lasts 20 years.

It is important that patents are requested as soon as possible. There is a risk of other companies or entrepreneurs also create patents for their ideas and if they are of the same type, the likelihood of getting a patent may decrease. Also, if it takes a lot to ask the patent, the entrepreneur may lose the chance to do so. This is because past 12 months after launching the product on the market, this opportunity will disappear.

This type of protection are signs that distinguish the products or services of one trader from another. They can take many forms, such as, words, slogans, logos, shapes, colors, sounds, symbols, distinct product names or marks or even a combination of these elements.

Trademarks are registered for specific products of a certain class. It is possible that other companies or entrepreneurs register their marks that are identical or similar, provided that they belong to different classes of brands already registered.

For a holder to apply for this type of protection , It must have a clear representation of the mark as well as identified the class of products for which the mark is applied. This mark must not be descriptive, include common last names, geographical names, registered company names or any indication of royal patronage.

A trademark lasts 10 years and that the holder can renew it indefinitely.

Copyrights protect original works of authorship. Examples of these are literary works, music, sound recordings, dramatic works, pantomimes, and cinematic choreography, sculptural works, pictorial and graphic, architectural works, software, web content, among many others.

A company or entrepreneur automatically owns the copyright in any work that they or their employees create. That is, your registration is voluntary. With this protection , The holder has exclusive rights and can decide how their work can be modified, performed, licensed, displayed or copied by others.

To qualify for copyright registration, the work should be represented in a tangible means of expression, such as a piece of paper. The duration varies according to the type of work, when and where it was created. Thus, the company should seek information on securing an idea .

trade secrets

A trade secret is something that companies keep secret in order to provide an advantage over its competitors. This kind of protection may include, but are not limited to the following, formula, process, device, business information, list of customers or suppliers, financial data, computer algorithms, programs, techniques.

Unlike other types of intellectual property , a protection by trade secret is not registered. Its duration depends on the measures taken by companies to control the dissemination and use of information. Thus, companies use confidentiality agreements, restricted access to confidential information, post-employment restrictive agreements, regular meetings with employees to keep them aware of what can not be transmitted outside the company and other security practices to keep information important within the company.

Innovative ideas allow many companies to succeed. This is because develop new and better alternatives that already exists in the market, offering a competitive advantage. THE intellectual property It is essential to ensure safety to the entrepreneur and facilitates a possible internationalization of the business.

Before boarding no product development Should confirm that there is no patent or other form of protection already registered, you can limit the planned development of the business idea.

If you need or feel better, the entrepreneur should seek professional help from lawyers, for example in order to determine the best protection that fits business and securing an idea . The aid of experienced entities can help the entire application process is done correctly.

About Sara Pereira

Have questions on formation, banking and taxes?

Schedule a FREE consultation with a formation and compliance expert today 📞

Safeguard Your Business Idea: Expert Tips for Protection

Intellectual property rights are important to protect your bottom line. From the proprietary recipe for coke to famous patents for the lightbulb, telephone, gas motor engine, and refrigerator, entrepreneurs and investors have worked to protect their business ideas for centuries, and you should, too.

As of 2022, Samsung is the world’s largest patent holder, with 6,248 patents granted during the year. Protecting your business concept is important even if you haven’t invented a new cell phone or lightbulb. Read on to know about how to protect a business idea and grow your business.

Why Is Protecting a Business Idea Important?

Protecting a business idea is crucial as it helps prevent others from copying or stealing your concept, ensuring that you have a competitive advantage in the market. For example, while “smartphone” is a broad idea, and most perform similarly to the end user, key differences drive Apple, Samsung, and every other major cellphone producer to protect their unique offering.

Whether you’re developing a line of children’s clothing, a hair business , planning to become a nurse entrepreneur , creating a seasonal business , or developing a type of business coaching, you’re bringing something into the market that is fundamentally unique and valuable.

When you protect those business ideas, mass producers in China or stores down the street can’t legally replicate it and sell it for half the price, driving away your business. From design patents and trademarks to intellectual property rights, read on to learn how to protect a business idea.

How to Protect a Business Idea in 7 Ways

Businesses, including Wyoming LLCs and other LLCs and corporations, rely on IP protection, patents, copyrights, and trademarks to protect their ideas, logos, and other intellectual property. Here’s how each of these work:

1. Intellectual Property (IP) Protection

According to the World Intellectual Property Organization , intellectual property or IP refers to creations of the mind or intellect, including inventions, literary or artistic works, designs, symbols, names, and images used in commerce. Patents, copyrights, and trademarks are the primary means companies use to protect IP, although companies may also hold IP rights for trade secrets, geographical indications, or industrial designs.

IP law allows individuals and businesses to earn recognition or financial benefit from what they invent or create.

Patents are generally granted to the inventor of something new. When someone invents something unique, a patent gives the owner the right to decide how or whether others can use the invention. Interestingly, to hold a patent, the patent owner must make technical information about the invention publicly available in the patent documentation.

Meanwhile, widely used inventions that have patents include the slinky (toy), hula hoop, and television.

Trademarks are signs that distinguish the goods or services of a company. Think of Nike’s swoosh symbol or the Starbucks logo as common examples of trademarks. Interestingly, the history of trademarks dates back to ancient times. Artisans would put their signatures or marks on their products, making them the first trademarks.

Copyrights are used to protect the rights of creators over their literary and artistic works. Works covered by copyright can include books, music, paintings, sculptures, films, computer programs, databases, advertisements, maps, and technical drawings.

2. Trade Secrets Law

Trade secrets are specific IP rights related to confidential information that may be sold or licensed. According to the US Patent Office , trade secrets include any information with actual or potential independent economic value that is not generally known. It must also have value to others who cannot legitimately obtain the information, and a company must demonstrate reasonable efforts to maintain its secrecy.

The unauthorized acquisition, use, or disclosure of trade secrets is considered unfair business practices and a violation of trade secret protection. You can file claims against an individual or company who has illegally acquired company trade secrets.

3. Non-Compete Agreements

A non-compete agreement, non-compete clause, restrictive covenant, or clause is commonly used with employees. Under a non-compete agreement, the employee, who could also be a trade partner, generally agrees not to enter into or start a similar profession or trade in competition against the company requesting the non-compete agreement.

For example, a software company may ask employees to sign non-compete agreements for five to ten years after they stop working at the company before allowing them to see its proprietary software or other trade secrets.

4. Non-Solicitation Agreements

Non-solicitation agreements are another way businesses protect their connection with employees and client bases. A non-solicitation agreement is a contract clause that states, again usually for employees, that if they move to work for a competitor, they won’t solicit any current business clients or employees. Non-solicitation agreements usually extend to confidential information connected to the employee’s current job, adding additional protection to trade secrets.

In the example of the software company employee above, with a non-solicitation agreement, the employee can’t share details about the original company’s clients, employees, or trade secrets if they went to work for a new software company.

5. Non-Disclosure Agreements

A non-disclosure agreement (NDA) is signed between companies or with an employee. It simply states that one or more parties agree not to disclose confidential information related to the business. For example, if two companies enter into a partnership or collaboration, both may agree to sign a non-disclosure agreement to protect their IP.

6. Work-For-Hire Agreements

A work-for-hire agreement is a one-time contract that allows companies to hire freelancers or other professionals for a set upfront cost or another form of payment in return for their services. Work-for-hire agreements are commonly used for writers, actors, or other professionals who create unique work.

In the case of a work-for-hire agreement, the copyright or trademark is passed on to the company. For example, if you hire writers to produce a screenplay or write regular blog posts for your company, with a work-for-hire agreement, your company owns the screenplay or blog posts.

7. Provisional Patents

According to the US Patent Office, when you apply for a provisional patent , you may file without a formal patent claim, oath, declaration, or any information disclosure statement. Generally, a provisional patent filing will protect your company for 12 months after which you need to file a non-provisional patent application.

Other Tips to Protect Your Business Ideas

In addition to the legal protective structures, there are other steps you can take to protect your business, including:

1. Employ Secure Communication Channels

Employing secure communication channels includes secure, password-protected company wifi and strong and unique passwords for real-time communication channels, including email and chat. Basic security precautions and company-wide protocols can help ensure information doesn’t fall into the wrong hands.

2. Timestamp Your Ideas

Timestamping allows businesses to secure and protect ideas and includes the ability to record the current time of an event from any computer. Common mechanisms, such as Network Time Protocol, allow networked computers and applications to communicate effectively while securely protecting information.

3. Only Share Your Idea Once It Has Received Protection

This is the simplest protection. Until you’ve established IP protection for your company’s idea, don’t tease it on social media or tell investors or anyone else about it. Ensure the protection of company ideas, and then move on to the next steps, from securing funding to marketing.

4. Monitor for Infringements of Your Protected Business Ideas

There are various software protocols online to monitor for infringement of your protected business ideas. Brand protection software like PhishLabs, Adthena, Allure Security, Corsearch, EBRAND, and Red Points can help you monitor for infringements on a large scale to help protect your business ideas and IP.

What to Do if Someone Steals Your Business Idea?

If you suspect someone has stolen your business idea, consult an attorney to understand your legal options, gather relevant evidence, and consider pursuing legal action if necessary. The sooner you take action, the better. Specialized IP lawyers can help you take the relevant actions and secure your IP, even without going to court.

Building in Business Protection

From starting a small business to developing one-person business ideas , Doola business formation and compliance services can take your idea into reality. While working to protect your intellectual property, Doola can help you secure the legal structure, EIN, and business bank account to get your company up and running. It can also ensure legal compliance. Get Doola formation services here!

What legal documents can help protect my business idea?

You can protect your business idea by filing for the relevant copyrights, trademarks, patents, and trade secrets.

How do I prevent others from stealing my business idea?

You can prevent others from stealing your business ideas with copyright protection, trademarks, patents, trade secrets, and provisional patents, as well as non-compete, non-solicitation, non-disclosure, and work-for-hire agreements.

How can I prevent employees from using my business idea for personal gain?

You can prevent employees from using your business ideas with non-compete and non-solicitation agreements.

Is it safe to discuss my business idea with potential investors?

Discussing business ideas with potential investors is safe if they have signed a non-disclosure or non-compete agreement. You can speak with an IP lawyer to ensure you protect the company with the best possible options.

Can I protect my business idea forever?

Yes, you can protect your business idea indefinitely with copyright, patent, trademark, or trade secret laws.

Free e-book

How to form a US LLC in 5 minutes

A beginner-friendly guide on the basics of LLCs. Learn about formation, banking, and taxes.

Schedule a FREE consultation with a US CPA today 📞

Keep reading

Start your dream business and keep it 100% compliant

Turn your dream idea into your dream business.

A beginner-friendly guide on the basics of LLCs. Learn about formation, banking, and taxes. Get ready to turn your dream idea into your dream US business.

Cookie consent

By continuing to browse this website, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Learn more.

Brand Protection Remove counterfeits
Impersonation Removal Take down scammers
Domain Management Reclaim your Name
Social Video Growth Monetize videos
Anti Piracy Eliminate Pirates
NFT Protection Stop NFT abuse
Revenue Recovery Program
Domain takedown
Copyright Infringement Protection
Trademark Monitoring Software
DMCA takedown service
Intellectual Property Protection
Social Media Protection software
Domain Monitoring Service
Trademark Protection Services
Marketplaces
Social Media
Fake Websites
Search Engines
Mobile App Protection
Video platforms
Cyberlockers
Red Points Reviews
Corporate Social Responsibility
Entertainment
Food & Beverage
Toys & Games
Brand Protection
Impersonation Removal
Gray Market
How To’s
IP Insights
Market Research
Product Guide
Industry Insights
What’s new in Red Points
Customer Stories
Business Impersonation Removal
Let’s talk
Request demo

Get the latest strategies to protect your revenue in your inbox

Finish your request and join the Newsletter

Thank you for subscribing.

How to legally protect a business idea

Table of Contents:

Last updated on: September 2, 2024

Do you have an exciting business idea up your sleeve? If so, it’s crucial to safeguard it from potential threats. Until it’s legally protected, scammers, malicious entities, and even legitimate competitors might be tempted to copy your idea and, consequently, your potential earnings.

The loss of your intellectual effort and innovation due to inadequate protection is a risk you don’t want to take. But in the realm of business, it’s a common oversight among entrepreneurs. This lack of preparedness for asserting and enforcing their intellectual property rights means that others can appropriate their ideas freely.

In this guide, we’ll explain how to address this issue, and the steps you can take to legally protect your business idea. We’ll also share strategies for asserting your ownership and combating intellectual property infringements as they arise.

How to legally protect your business idea

Register your intellectual property (IP) portfolio
Monitor for infringements of your protected business ideas
Enforce IP ownership and take down infringements
Employ a brand protection software

Register your intellectual property portfolio

The first step to legally protect a business idea is fairly straightforward: you want to register ownership of your intellectual property. Intellectual property refers to the ownership of intellectual creations, ideas, and concepts. Common examples of business IP include brand logos and names, inventions, and product designs.

Having formal registrations for each of your business ideas will help stop infringements of your intellectual property . There are four distinct types of IP that will protect your business ideas, and it’s important you register them correctly. The four types of intellectual property are copyrights, trademarks, patents, and trade secrets.

1. Copyrights

Copyrights protect original creations. Copyrights protect your unique business content from being replicated. This means that someone can’t legally make a copy of your creation, whether they go on to sell it or simply copy it for themselves.

There are many types of content that would fall under copyright protection as it pertains to your business. For example, blog articles, web content, unique patterns, and graphic designs are all forms of business copyright content that you can register.

While copyright applies automatically to the creator, it’s still a good idea to get it registered to best protect your copyrighted content . This will create a record and make it easier to prove your ownership of creations if you have to take down an infringement.

2. Trademarks

Trademarks protect the content and ideas that help customers distinguish your brand from others. Common business trademark examples include brand names, logos, slogans, and particular product packaging and/or design.

Trademarks, like copyrights, are automatically applied and protect your unique brand identifiers from being used by scammers or competition.

Again, we do recommend you officially register your business trademarks if you want the best protection for your business ideas. Registering your business trademarks grants you the right to take legal action against anyone infringing on your IP and using it for themselves.

Patents protect inventions that may or may not yet exist, and therefore help protect ideas and concepts vs. existing creations like copyrights and trademarks.

Unlike the former types of intellectual property rights, patents aren’t automatically applied to inventions and require registration with the United States Patent and Trademark Office .

Patents are necessary to protect your invention and keep it from being stolen and replicated. To enforce a patent and take down anyone stealing your idea, you’ll need this legal registration in your IP portfolio.

4. Trade Secrets

Trade secrets protect the particular processes and information a business uses to operate and succeed. Common examples of trade secrets include recipes, processes used to create or analyze content, and client lists used for sales.

Trade secrets are another type of intellectual property that is automatically granted to the owner. To be considered a trade secret legally, you must ensure the information is:

Beneficial to your business because it is a secret
Beneficial to others (like consumers) who can’t access the information
Reasonably protected by the owner to ensure the information does not become public knowledge

If someone steals your trade secrets, you have the legal right to enforce your ownership and take legal action against them. This is vital to ensure your competition cannot benefit from your unique business ideas.

Once you have the proper registrations for all of your intellectual property, make sure you keep a detailed record. Developing an IP portfolio will mean that you and the rest of your team know exactly which of your content is protected. It will also be necessary to prove ownership of your IP if you have to deal with infringements.

Monitor for infringements of your protected business ideas

Registering your IP will help you claim legal ownership of your business ideas, but it won’t necessarily stop bad actors from stealing your IP anyway. It’s especially easy for scammers to steal your content and business ideas and infringe on your IP online, where counterfeiting and brand impersonation are rampant.

To protect a business idea from being stolen, you must be on the lookout for anyone infringing on your content. Monitor for infringements across all of your sales channels, as well as places where you don’t currently sell your products or operate your business.

Common places for IP infringements to occur include fake websites , Ecommerce marketplaces like Amazon and Shopify , and social media platforms like Facebook and Instagram . To best protect your business ideas and content, it’s important to monitor for infringements on as many of these channels as possible.

Enforce IP ownership and take down infringements

If you do notice someone infringing on your intellectual property, enforce your ownership and submit a claim to have it taken down immediately. If left alone, someone can completely damage your brand reputation and steal your revenue by producing and selling your intellectual property.

How are intellectual properties enforced?

One universal way to enforce ownership of your IP is to send a cease and desist letter to the infringer. This notifies them that they have unlawfully used your protected content and will face legal repercussions if they don’t take down the infringement. It also creates a record for you to use in court if you need to proceed with legal action.

You can also report an infringement to any platforms the stolen content appears on, if applicable. You can report an infringement on Instagram , for example, and other social media platforms, Ecommerce marketplaces, and search engines.

No matter what methods you use to enforce your intellectual property, it’s important to keep following up until the infringement is taken down. If you aren’t successful with these tactics, it’s a good idea to invest in an IP lawyer or brand protection expert .

Employ a brand protection software

With the volume of scammers and bad actors online, protecting your business ideas from being stolen can be nearly impossible alone. Employing a Brand protection Software like Red Points can help you monitor for infringements on the scale you need to properly protect your business ideas.

Red Points software can change the way you enforce your IP by making the process completely automatic. Instead of spending days scouring thousands of sites and platforms yourself, this software keeps a constant monitor for infringements all across the web. It also sends automatic takedown requests when infringements are identified, so you don’t have to waste time writing and sending C&D letters.

What’s next

There are thousands of scammers, bad actors, and even industry competitors out there who can easily steal your intellectual property. It is vital to protect your business ideas and enforce your IP to ensure others aren’t stealing your revenue and profiting off your ideas. Red Points can help protect your business idea with 24/7 infringement monitoring and automatic takedowns that save you time, stress, and money. Request a demo today and learn more about our services. See how you can protect your business with the most advanced Brand Protection Software ..

Writing a Business Plan & Protecting Your Idea Don't know where to start? Here are the first steps, plus how to protect your business idea.

By Stever Robbins Jul 17, 2000

Opinions expressed by Entrepreneur contributors are their own.

Q: I'm a budding entrepreneur, and over the years, I've brainstormed about many different business ideas. What's the first step in getting my concepts rolling? Is it setting up the Web site and launching a direct-mail campaign, forming the company structure or writing a business plan?

A: Unfortunately, there's no magic formula. Successful companies use every combination, and then some. Here's my recommendation, but check with your lawyer and accountant before making final decisions.

First, create the business plan. A plan structures your idea. It lets you think through your market assumptions, product, distribution, management and financial needs. Even if you never need to raise outside money, now may be your only chance to think through everything from top to bottom and know where and how you're going. You can also work with a lawyer to choose a corporate structure that's most suited to your operational and financial needs.
Next, incorporate. That way, start-up expenses clearly belong to your business and not to you as an individual. Incorporating early will also start your company's legal history, which can make it easier to get credit and raise bank financing later on. Furthermore, lawyer Joe Volman ( [email protected] ), a specialist in early-stage deals, points out that incorporating limits your liability once you start dealing with customers. In addition, he says you want as much time as possible between incorporation and outside investment to justify a low share price at incorporation. Your founder's shares are considered income by the IRS, and it's hard to value them at a penny per share two weeks before outside investors pay $1 per share. But always check with your own lawyer who knows your situation and your state's tax laws before deciding when to incorporate. Doing this properly at the start can save thousands (if not millions) of dollars down the road.
Finally, build your site and market it. Your business plan is your chance to identify your customers, value proposition, financials and the response rates you need to be successful. If you begin building and marketing without the up-front thought, you won't know if your time and money are going toward the right things. A 3 percent direct-mail response rate is incredibly good, but if your business plan requires a 10 percent response to be profitable, it's best to know that before you pay for a direct-mail campaign.

Q: I'm also uncertain about showing my plan around once it's completed. Should I take measures to protect my ideas and concepts at that stage, and if so, what types of actions can I take to ensure my concept stays mine?

A: Protecting intellectual property (IP) is best done early by using a good intellectual capital lawyer. IP protection covers many areas, including the business idea, technology ownership and trademarks.

Entrepreneurs often ask investors to sign nondisclosure agreements (NDA) to protect the business idea. Few angels and almost no venture capitalists will sign an NDA. If one of their portfolio companies is already working on a similar idea, they can't sign it. If they did, you could show up years later claiming they stole your idea.

VCs also say you can trust them anyway since breaking confidentiality would hurt their deal flow. Really? If a VC has track record of making entrepreneurs multimillionaires in 18 months, would you talk with them even if you heard rumors they steal ideas? Probably. Especially since those rumors can be dismissed as sour grapes from unfunded entrepreneurs. Indiscretion might tank a VC's deal flow, but I doubt it would be as devastating as they portray.

Business Plan Guide »

How Long Should Your Plan Be?
When Should You Write It?
Who Needs A Business Plan?
Why Should You Write A Business Plan?
Determine Your Goals and Objectives
How To Write A Business Plan
Marketing Plan
Updating Your Business Plan
Enhancing Your Business Plan
Business Plan Software
Books and How-to Manuals
Business Plan Templates
Sample Business Plans

But they have a much more solid argument: The idea doesn't make the difference-entrepreneurship is all about execution. And I agree wholeheartedly. Dreamers with good ideas are a dime a dozen. But in my daily work with entrepreneurs, it's the day-to-day implementation that makes or breaks them, not the grand ideas.

Specific technology is easier to protect than ideas. You can apply for patents and trademarks to protect proprietary technology you bring to the table. Patents protect, and they become assets that increase your valuation. Patents may even protect your business models. One company I've worked with has been told that some of their ways of doing business are patentable.

Caution: Don't rely too much on patents or trademarks in a practical sense. If someone infringes, your patent is only as good as your ability (time and legal resources) to prosecute infringements.

If your idea is all you have, as soon as you start sharing it to raise money, hire employees or establish trade accounts, then it's time to start executing for everything you're worth.

As an entrepreneur, technologist, advisor and coach, Stever Robbins seeks out and identifies high-potential start-ups to help them develop the skills, attitudes and capabilities they need to succeed. He has been involved with start-up companies since 1978 and is currently an investor or advisor to several technology and Internet companies including ZEFER Corp., University Access Inc., RenalTech, Crimson Soutions and PrimeSource. He has been using the Internet since 1977, was a co-founder of FTP Software in 1986, and worked on the design team of Harvard Business School's "Foundations" program. Stever holds an MBA from Harvard Business School and a computer science degree from MIT. His Web site is a http://www.venturecoach.com .

The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

Stever Robbins is a venture coach, helping entrepreneurs and early-stage companies develop the attitudes, skills and capabilities needed to succeed. He brings to bear skills as an entrepreneur, teacher and technologist in helping others create successful ventures.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Most Popular Red Arrow

The side hustle she worked on in a local starbucks 'went from nothing to $1 million.' now it will make over $30 million this year..

Melinda Spigel transformed a simple jewelry-making hobby into a lucrative full-time business with multimillion-dollar annual sales.

6 Ways to Enhance Collaboration and Communication With Workflow Automation

How establishing specific objectives and using workflow automation can enhance client satisfaction and overall business success.

An Iconic McDonald's Treat Is About to Get a Makeover — Here's What to Expect

The company is changing the packaging of one popular treat to meet consumer demands around sustainability.

Use This 'Simple Yet Timeless' Career Advice That Will Change Your Outlook on Career Advancement

Whether you are trying to advance your career, take a step back or focus on other things, I've found this advice helpful in navigating my life.

Want to Scale? Streamline Your Decision-Making Process in 3 Steps

Scaling a business hinges on streamlined decision-making. Leaders must be agile, making accurate and timely decisions to ensure success.

How to Overcome Imposter Syndrome and Start a Business, According to Gary Vee, a Serial Entrepreneur Worth Over $200 Million

In an exclusive interview with Entrepreneur, Gary Vaynerchuk shares how to overcome your fears when starting a business.

Successfully copied link

Original text

Whether you’re starting your new business, or your company has been up and running for a while, protecting the business you have worked hard to build is essential. However, in the excitement of managing a small business, many entrepreneurs may skip this very important step.

Here are seven ways you can protect your small business from risk.

1. choose the right form of business..

Operating as a sole proprietorship is the default business structure for a one-person business. But while this option may be easy, it's not necessarily the best choice to protect your business. For one thing, the sole proprietorship structure doesn’t shield your personal assets. That means if a customer decides to sue you or a vendor demands payment that your business can’t afford, your savings, home and other assets could be fair game.

Depending on your future goals for your business, a corporation or limited liability company (LLC) could be better for you. Learn more about how to choose the right form of business .

2. Get legal help.

For some basic legal matters, an online legal resource can provide helpful guidance and tools, such as Rocket Lawyer , Nolo or LegalZoom . You’ll typically find:

Access to information. The specifics vary by the legal websites, but most include articles, blogs, checklists, templates and legal forms including non-disclosure agreements, business contracts and LLC operating agreements. This information can help you understand your legal rights and obligations and provide guidance to help you navigate your legal needs.
Legal tools. These kinds of legal websites can offer tools such as business formation documents, trademark, copyright and patent information, as well as annual reports that you’ll need to file and more.
Helpful compliance resources. You’ll typically find sample privacy policies, terms of service and website cookie notices.

However, there may be times you need a lawyer to represent you. If that happens, here are some steps to follow:

First, identify the specific legal issues your business is facing. Do you need help with business formation, contract review, employment law, intellectual property or something else?
Ask your friends, family and business associates for recommendations for lawyers who specialize in the area of law you need help with. Check with your local bar association or chamber of commerce for referrals.
Once you have a list of potential lawyers, schedule interviews to learn about their experiences working with small businesses, expertise and fees. Ask about their availability and who in their office will handle your case.
Be upfront about your budget. If cost is a concern, discuss payment options — many attorneys have affordable solutions or may be able to refer you to a less expensive colleague.

3. Find an accountant.

Even if you plan on doing business bookkeeping yourself, getting a good accountant is worth the price. Who has time to keep up to date on tax law changes? You sure don’t — but accountants do. Not only can they ensure you take advantage of any tax breaks, but they can also provide valuable advice on how to structure your business, the best way to finance business expansion, and how much you should pay yourself.

During your startup phase, an accountant can help you assess your financing needs, advise whether your financial projections are realistic, and help you assemble documentation and a presentation that will convince investors and lenders to finance you.

4. Buy business insurance.

Most businesses need general liability insurance, which protects the business from a variety of claims that can arise from business operations. A business owner’s policy combines general liability with property coverage and is a popular solution for many small business owners. If you provide advice or professional services to customers, you may also need professional liability insurance, also known as E&O (errors and omissions) coverage. If you use a vehicle for business purposes, such as traveling to customers to perform services, transporting materials or people or delivering products, you will likely need commercial auto insurance. Depending on which state you operate in, you may be required to have workers’ compensation insurance. Other insurance products to consider include employee life insurance, business interruption insurance and cyber insurance. Learn about protecting your business from common and uncommon risks in Progressive’s Prepare and Protect Guide . An independent agent in your area can also help you determine which coverages will best serve your business .

5. Be smart about new customers and clients.

Small business owners can face cash flow issues due to late or unpaid invoices. Fortunately, there are some things you can do to mitigate the risk.

Start with a contract. A written contract outlines the terms of your agreement, including the scope of work, the price, the payment terms and any deadlines. Considering having an attorney review your master contract template before customizing it for clients.
When the contract is signed. (Your deposit.)
When the work begins.
Interim milestones. These will vary by the type of business you own. For example, for a home remodeler, the milestone could be finishing one room; for an accountant, it may be completing an audit; and for a graphic designer, it could be developing a specific number of website pages.
When the project is finished.
Send invoices promptly. S end an invoice for every payment milestone. The invoice should be clear and concise and include all relevant information, including the date, invoice number, contact information and payment terms. Remember to thank the customer for their business.

6. Protect your employees.

From an electrical fire that destroys your inventory to a natural disaster like a flood or hurricane, disaster can strike your business at any time. That’s why having a disaster plan for what you will do in an emergency is important. A good disaster plan protects both your business and your people. Create a plan and assign responsibilities for how to get employees and customers out of the building safely, what to do if a disaster keeps you and employees from getting to your business, and how you will keep running even if you can't get to your physical location.

Ready.gov, an official website of the U.S. Department of Homeland Security, offers business disaster toolkits for hurricanes, earthquakes, flooding, power outages and other types of hazards.

7. Protect your business data.

Cyber threats are on the rise, and small businesses are frequent targets. To protect your business, start by backing up your company data and documents and storing them securely. A cloud-based file storage solution keeps your data safe off-site and accessible no matter where you are. To protect your business from cybercrime and hackers, install appropriate firewalls, use business-grade computers and antivirus software, and train your employees in cyber security measures, such as creating strong passwords. SCORE’s Small Business Guide to Cyber Security can help you get started.

Your SCORE mentor can help you determine additional ways to manage risks and protect your business.

Progressive Commercial Insurance

With over 50 years of experience, Progressive Commercial Insurance offers a full range of business insurance products featuring competitive rates and first-class service. They offer customized insurance solutions for both heavy and light commercial vehicles, as well as business insurance coverages including general liability and business owners policies, professional liability, workers’ compensation and more. Progressive is a Fortune 100 company and trusted by thousands of small business owners to protect their livelihood.

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

Library of Congress
Research Guides

Small Business Hub: A Research Guide for Entrepreneurs

Protect your business.

Introduction
Market Research
Write a Business Plan
Finance Your Business
Find a Location
Licenses and Regulations
Manage Your Business
Going International
Franchising
Book a Librarian
Using the Library of Congress

When it comes to protecting your business there is more than just the safety of physical properties to think about. Safeguarding new ideas and inventions as well as the products created as a result, which constitute the intellectual property of a company, should be a top priority—the company's existence may depend on its intellectual property. There are four basic types of intellectual property (IP) protection to be aware of: patent, trademark, copyright, and trade secret . Entrepreneurs should know about each of them to protect their IP and to take care not to violate someone else's IP rights. Getting educated about intellectual property rights, learning how to protect it, and taking necessary steps recommended by experts can reduce the risk of IP violations, although it will not replace the legal advice you might have to seek in some cases.

Starting points:

Take training courses like Online IPR Training Module from STOPfakes.gov.
Explore the Inventor and Entrepreneur Resources from the U.S. Patent and Trademark Office
Read the suggested books below.

Suggested strategies:

Identify what kinds of intellectual property your company owns.
Use this assessment tool from U.S. Patent and Trademark office: IP Awareness Assessment (USPTO)
Register your copyright, trademark, patent as appropriate.
Make sure your company's trade secrets are secure.
For additional research assistance send your question to the Law Library of Congress .

Selected Resources

Available at the Library of Congress
Free Online Resources
Related Guides

Business Guide to Intellectual Property Rights (IPR) | stopfakes.gov STOPfakes is dedicated to helping U.S. companies protect their innovations and safely market their products at home and overseas. Here you will find guidance and resources to help you understand how to register your company's intellectual property and protect it from counterfeiting and piracy.
Enterprising Ideas: A Guide to Intellectual Property for Startups | WIPO (2021) External This publication introduces startups to IP. Through step-by-step guidance, useful case studies and simple checklists, it illustrates how small businesses can use IP to remain competitive and manage risks. Written for startups bringing an innovative technology-based solution to market, the guide will be useful to any entrepreneur wanting to get to grips with the IP system.
Guide to Brand Protection for Small and Medium Sized Enterprises External This guide is designed to give essential information to firms at all stages of development – from start-ups and emerging businesses to established firms – that are looking to develop or strengthen their brand protection strategy.
A Guide to Intellectual Property Protection (PDF, 746 KB) Minnesota Department of Employment and Economic Development and Merchant & Gould P.C. This Guide is intended to serve as a primer for the inventor and entrepreneur on the protection of new ideas and the products which result from them. Like all publications of this kind, the Guide is not intended as a substitute for the advice of an attorney on the complexities of intellectual property law.
Intellectual Property Protection: Safeguard Your Company’s Trade Secrets, Proprietary Information and Research (FBI) This brochure from FBI lists types of proprietary information that could be targeted and strategies to protect it.
Inventor and Entrepreneur Resources (USPTO) Select resources from the U.S. Patent and Trademark Office aimed at entrepreneurs include startup resources, how to sell your intellectual property, applications for patents and trademarks, and information about scam protection.
IP Awareness Assessment (USPTO) The IP Awareness Assessment, developed under the joint efforts of United States Patent and Trademark Office (USPTO) and National Institute of Standards and Technology/Manufacturing Extension Partnership (NIST/MEP), allows users to assess your intellectual property awareness. Following the completion of the assessment, users are offered a customized training material.
IP Protect (National Intellectual Property Rights Coordination Center) This is a joint initiative of IPR Center in partnership with Michigan State University’s Center for Anti-Counterfeiting and Product Protection (A-CAPP), U.S. Chamber of Commerce, and the Better Business Bureau. It provides resources – free of charge – to aid small to medium-sized enterprises in protecting themselves against IP theft, fraud and cyber security awareness.
Managing Challenges: Protecting your IP Abroad (Privacy Shield Framework) Offers a video that explains how to protect your IP abroad and other helpful resources.
Patent Law: A Beginner's Guide (Law Library of Congress) Patents protect the rights of an inventor of certain items, including “any new and useful process, machine, article of manufacture, or composition of matter,” among others. This guide provides a foundation for researching patent law and the patent process
<< Previous: Licenses and Regulations
Next: Market Your Business >>
Last Updated: Aug 22, 2024 12:04 PM
URL: https://guides.loc.gov/small-business-hub

Search Search Please fill out this field.

Importance of Asset Protection

Internal and external claims on assets, asset types, asset-protection strategies, best asset-protection vehicles, picking a general partnership, the bottom line.

Small Business
How to Start a Business

Asset Protection for the Business Owner

As a business owner, you probably realize that operating and owning a business can be fraught with pitfalls and risks. Turning a profit isn't enough; you must also protect your business from claims and lawsuits. Debts and mortgage obligations to third parties and vendors , claims for damages caused by your employees, product or professional liability, and consumer-protection issues are just some of the risks you must deal with. If handled improperly, these risks could result in the loss of both business and personal assets. Knowing what risks you face and how to minimize or avoid them gives you the chance to run your business successfully.

The goal of a comprehensive asset-protection plan is to prevent or significantly reduce risk by insulating your business and personal assets from the claims of creditors. Unfortunately, most small-business owners are unaware of all the potential risks that can harm their business and the options available to protect themselves. An asset-protection plan employs legal strategies, put in place before a lawsuit or claim arises, that can deter a potential claimant or help prevent the seizure of your assets after a judgment . If you haven't already put your asset-protection plan in place, don't wait. The longer the plan has been in existence, the stronger it likely will be.

Strategies used in asset-protection planning include separate legal structures or arrangements, such as corporations , partnerships , and trusts . The structures that will work best for you depend, in large part, on the kinds of assets you own and the types of creditors most likely to pursue claims against you.

Internal claims arise from creditors whose remedy is limited to assets of a particular entity, such as a corporation. For example, if you have a corporation that owns a piece of real estate and someone slips and falls on the property owned by the corporation, the injured party is limited to pursuing the corporation's assets (i.e., the real estate). This assumes you did not cause the injury.

External claims are not limited to the assets of the entity and can extend to your personal assets. For instance, if the same corporation owned a truck that you negligently drove into a crowd of pedestrians, the injured could not only sue the corporation but also you, and satisfy any judgment from corporate assets as well as your personal assets.

Knowing the type of claims that can be made will allow you to better plan and protect your property from seizure and your wages from garnishment . It is also important to understand which types of assets are more susceptible to claims.

So-called dangerous asset , by their very nature, creates a substantial risk of liability. Examples of dangerous assets include rental real estate, commercial property , business assets , such as tools and equipment, and motor vehicles. Safe assets , on the other hand, do not promote a high degree of inherent liability. Ownership of stocks , bonds , and individually owned bank accounts do not incorporate risk by their very existence.

Safe assets can generally be owned by you individually or by the same entity since they carry with them a low probability of risk. However, you do not want to commingle dangerous assets either with other dangerous assets or with safe assets. Keeping ownership of dangerous assets separate limits exposure of loss to the individual asset.

For example, a medical practice has an obvious, inherent risk of liability. But did you know that if you own the building in which the practice is operated, that property may also be considered a dangerous asset? If both the practice and building are owned by you or by the same entity, liability arising from either asset could stretch to and include the other, exposing both your livelihood and property to risk of loss.

Many different strategies have been developed over the years claiming to protect assets. Some of these plans use long-standing legal entities to carry out their intent, while others are nefarious or even illegal, and promote a money-making scam on the innocent and uneducated. Some of the more common legal vehicles used for asset protection include corporations, partnerships, and trusts.

Corporations

Corporations are a form of business organization created in accordance with state law. Legal ownership of the corporation vests in its shareholders, as evidenced by shares of stock. Generally, each shareholder is entitled to elect a board of directors charged with the overall management of the corporation. The board of directors elects the officers (the president, secretary, and treasurer), who are authorized to conduct the day-to-day business of the corporation. Many states permit a single individual to serve as sole director and to hold all of the corporate offices.

There are several types of corporations that are used to protect assets: business or C corporation , S corporations , and limited liability companies (LLCs). The appeal of corporations as an asset-protection tool lies in the limited liability provided to its officers, directors, and shareholders (principals). Corporate principals have no personal liability for corporate debts, breaches of contract or personal injuries to third parties caused by the corporation, employees or agents. While the corporation may be liable or responsible, a creditor is limited to pursuing only corporate assets to satisfy a claim. The assets of the corporate principals are not susceptible to claim or seizure for corporate debts. This protection from personal liability distinguishes the corporation from other entities, such as partnerships or trusts.

One prominent exception to the limited liability of corporate principals relates to providers of personal services. Personal service liability includes work done for or on behalf of another by doctors, attorneys, accountants , and financial professionals. For example, a doctor who forms a corporation and works for it as an employee may still be liable for damages attributable to the treatment of a patient even though he was working for the corporation.

In addition, liability protection offered by a corporation will be available only if the corporation carries itself as a separate and distinct entity, apart from the individual shareholders or officers. If a corporation has no significant assets, a creditor can attempt to prove that the corporation is not acting as a separate and distinct business entity but is the alter ego of its officers or shareholders. This strategy is called piercing the corporate veil, and if successfully proven, it allows the creditor to reach beyond the corporation to the assets of its shareholders.

S Corporations

An S corporation is similar to a C corporation except that it qualifies for a special IRS tax election to have corporate profits pass through the business and be taxed only at the shareholder level. While the liability protection afforded to C corporations generally applies to S corporations as well, there are additional qualifications the S corporation must meet as to the number and type of shareholders, how profits and losses may be allocated among shareholders, and the kinds of stock the company can issue to investors.

Limited Liability Corporations

Due to the added formalities imposed on S corporations, this entity evolved. An LLC affords similar liability protection to corporate principals as a C corporation and the same "pass-through" tax treatment of S corporations, but without the formalities and restrictions associated with those corporation structures.

General Partnership

A general partnership is an association of two or more persons carrying on a business activity together. This agreement can be written or oral. As an asset-protection tool, a general partnership is one of the least-useful arrangements because each partner is personally liable for all of the debts of the partnership, including debts incurred by other partners on behalf of the partnership. Any single partner can act on behalf of the other partners with or without their knowledge and consent.

This feature of unlimited liability contrasts with the limited liability of the owners of a corporation. Not only is a partner liable for contracts entered into by other partners, but each partner is also liable for the other partners' negligence. In addition, each partner is personally liable for the entire amount of any partnership obligation.

Limited Partnership

A limited partnership (LP) is authorized by state law and consists of one or more general partners and one or more limited partners. The same person can be both a general partner and a limited partner , as long as there are at least two legal persons or entities, such as a corporation, who are partners in the partnership. The general partner is responsible for the management of the affairs of the partnership and has unlimited personal liability for all partnership debts and obligations.

Limited partners have no personal liability for the debts and obligations of the partnership beyond their contributions to the partnership. Because of this protection, limited partners also have little control over the day-to-day management of the partnership. If a limited partner assumes an active role in management, that partner may lose their limited liability protection and be treated as a general partner. This restricted control over the partnership business diminishes the value of limited-partnership shares.

A trust is an agreement between the person creating the trust (referred to as the settler, trustor or grantor ) and the person responsible for managing the assets of the trust (the trustee ). The trust provides that the grantor will transfer certain assets to the trustee, who will hold and manage the assets in trust for the benefit of another person, called the beneficiary . A trust created during the life of the grantor is called an inter-vivos trust or living trust , while a trust created at the death of the grantor through a will or living trust is referred to as a testamentary trust .

While trusts have been used in many different asset-protection strategies, there are two basic types of trusts: revocable and irrevocable. A revocable trust is one in which the grantor reserves the right to alter the trust by amendment, or to dissolve a part or all of the trust by revoking it. The grantor has no such rights with an irrevocable trust . It's this precise lack of control that makes the irrevocable trust a powerful asset-protection tool. You can't be sued for assets you no longer own or control.

Now that you're familiar with the most common asset-protection structures, let's consider which vehicles work best to protect particular types of assets.

If you have a professional practice or business, your risk of loss and liability for claims is particularly high, making this type of business a dangerous asset. Incorporating your business or practice was once considered the best way to insulate your personal assets from liability and seizure resulting from claims against your business. However, the limited liability company has quickly replaced the standard business or C corporation as the asset-protection entity of choice, as it offers a more convenient, flexible, efficient and less-expensive alternative to the C corporation while providing the same level of protection.

Because LLCs are creatures of individual state law, the filing requirements and protections they offer may differ from state to state. But, for the most part, state law essentially separates the owners of the LLC and their personal assets for liability arising out of LLC activities.

Nevertheless, in many states, certain types of business professionals cannot afford themselves all of the protections offered by the LLC. Professionals, such as doctors, lawyers, dentists, and psychiatrists, to name a few, can't shield themselves from liability with either an LLC or a corporation for claims directly arising from their actions or inaction.

If the business entity cannot protect you personally, consider sheltering your personal assets in other entities, such as a family limited partnership (FLP), a trust or an LLC. Then, even if you are sued personally, at least some of your personal assets are protected within one or a combination of these entities, discouraging creditors from pursuing them.

A final note for professional practice or business owners: It is still worth your while to incorporate either with a C corporation or an LLC. While these business entities may not protect you from malpractice claims, they will shelter you from the financial obligations of the corporation, unless you personally guarantee the debt. You also may be protected from most other claims of the business not directly related to your actions as a professional, such as claims of employees, suppliers, landlords or tenants.

The answer is almost always an unequivocal "no." As a co-partner, you are responsible for all partnership debts and acts of the partners regardless of your participation or knowledge. Being part of a general partnership greatly expands the exposure of your personal assets to claims arising from your business relationship.

If you are part of a general partnership, strongly consider protecting your personal property as described above. Without some protection, you could lose everything because of your mere association with the partnership and other partners.

Creating and implementing a comprehensive asset-protection plan involves almost every aspect of your business. The goal of the plan is to protect your business assets within the framework of your business operations. Protecting your business is both allowed and encouraged, using honest, legal concepts and entities where appropriate. Extending these goals to intentionally deceive other businesses or individuals is not asset-protection planning - it's a fraud.

Consider the services of an asset-protection professional, such as an attorney or financial advisor , in developing an asset-protection plan that works best for you.

For related reading, see " Build a Wall Around Your Assets ."

Internal Revenue Service. " S Corporations ."

Internal Revenue Service. " Limited Liability Company (LLC) ."

Terms of Service
Editorial Policy
Privacy Policy

Kaspersky Premium
Kaspersky Plus
Kaspersky Standard
Kaspersky Safe Kids
Kaspersky VPN Secure Connection
Kaspersky Password Manager
Renew Licence
Trials & Downloads
KSOS Portal
Renew SMB licence
Find a partner
Company Account
Kaspersky TIP
Cloud Console
Product Training & Certification
Find a reseller
Find a distributor
Partnership with Kaspersky
Get to know us
Company overview
Transparency
Corporate News
Awards & Recognitions
Top 3 Rankings
Press center
Sponsorships
Policy blog

Cybersecurity for Small Businesses

Cyber threats aren't just a problem for big corporations and governments – small businesses can be targets too. In fact, there is evidence that small businesses are more vulnerable to cyberattacks , not least because they sometimes lack the resources to protect themselves effectively.

It's important to protect your business from cyberattacks, but with the cyber landscape evolving all the time, it can be daunting to know where to start. Here’s a guide to help small businesses navigate the world of cyber threats.

Why is cyber security so important for small businesses?

Cyberattacks put your money, data, and IT equipment at risk. If a hacker gains access to your network, they can inflict significant damage with what they find, such as:

Access to customer lists
Customer credit card information
Your company's banking details
Your pricing structure
Product designs
Business growth plans
Manufacturing processes
Other types of intellectual property

These attacks don't just put your company at risk. Hackers may use their access to your network as a stepping stone into the networks of other companies whose supply chains your business forms part of.

As more people around the world work remotely, cyber security for business has become even more important. Many small businesses use cloud-based technology and tools for their daily operations – including online meetings, advertising, buying and selling, communicating with customers and suppliers, and banking transactions. For both financial and reputational reasons, it’s essential to protect your data and cloud-based systems from unauthorized breaches or hacks.

What is the impact of cyberattacks on small businesses?

A cyberattack can have a devastating impact on your business. In fact, 60% of small businesses that fall victim to an attack shut down within six months after the breach . While that may be the most drastic potential result of an attack, there are other consequences that your business could experience, including:

Financial losses from theft of banking information
Financial losses from disruption of business
High costs to rid your network of threats
Damage to your reputation after telling customers their information was compromised

Cybersecurity tips for small businesses

As a small business, you might feel helpless against cyberattacks. Fortunately, you can take steps to protect your company by keeping up with the latest security ideas for businesses. Here are some essential business cybersecurity tips:

1: Train your employees

Employees can leave your business vulnerable to an attack. While precise statistics vary by country and industry sector, it is unquestionably the case that a high proportion of data breaches are caused by insiders who either maliciously or carelessly give cybercriminals access to your networks.

There are many scenarios that could result in employee-initiated attacks. For instance, an employee might lose a work tablet or disclose login credentials. Employees may also mistakenly open fraudulent emails, which can deploy viruses on your business’ network.

To protect against threats from within, invest in cybersecurity training for your employees. For example, teach staff the importance of using strong passwords and how to spot phishing emails. Establish clear policies describing how to handle and protect customer information and other vital data.

2: Carry out risk assessment

Evaluate potential risks that might compromise the security of your company's networks, systems, and information. Identifying and analyzing possible threats can help you devise a plan to plug security gaps.

As part of your risk assessment, determine where and how your data is stored and who has access to it. Identify who may want to access the data and how they may try to obtain it. If your business data is stored in the cloud, you could ask your cloud storage provider to help with your risk assessment. Establish the risk levels of possible events and how breaches could potentially impact your company.

Once this analysis is complete and you have identified threats, use the information you have collated to develop or refine your security strategy. Review and update this strategy at regular intervals and whenever you make changes to information storage and usage. This ensures your data is always protected to the best of your ability.

3: Deploy antivirus software

Choose antivirus software that can protect all your devices from viruses, spyware , ransomware , and phishing scams. Make sure the software not only offers protection, but also technology that helps you clean devices as needed and resets them to their pre-infected state. It’s important to keep your antivirus updated to stay safe from the latest cyber threats and patch any vulnerabilities.

4: Keep software updated

As well as antivirus, all the software you use to keep your business running should be kept up-to-date. Vendors regularly update their software to strengthen it or add patches that close security vulnerabilities. Bear in mind that some software, such as a Wi-Fi router’s firmware, may need to be manually updated. Without new security patches, a router – and the devices connected to it – remain vulnerable.

5: Back up your files regularly

Does your company back up its files? If a cyberattack happens, data could be compromised or deleted. If that happened, could your business still run? Don’t forget to consider the amount of data that may be stored on laptops and cell phones – without this, many businesses wouldn’t be able to function.

To help, make use of a backup program that automatically copies your files to storage. In the event of an attack, you can restore all your files from your backups. Choose a program that gives you the ability to schedule or automate the backup process so you don't have to remember to do it. Store copies of backups offline so they don't become encrypted or inaccessible if your system suffers a ransomware attack.

6: Encrypt key information

If your business deals with data relating to credit cards, bank accounts, and other sensitive information on a regular basis, it’s good practice to have an encryption program in place. Encryption keeps data safe by altering information on the device into unreadable codes.

Encryption is designed with a worst-case scenario in mind: even if your data is stolen, it would be useless to the hacker as they wouldn't have the keys to decrypt the data and decipher the information. That's a sensible security precaution in a world where billions of records are exposed every year.

7: Limit access to sensitive data

Within your business, restrict the number of people with access to critical data to a minimum. This will minimize the impact of a data breach and reduce the possibility of bad faith actors from within the company gaining authorized access to data. Set out a plan which outlines which individuals have access to certain levels of information, so that roles and accountability are clear to all involved.

8: Secure your Wi-Fi network

If your business is using the WEP (Wired Equivalent Privacy) network, make sure you switch to WPA2 or more later, as these versions are more secure. It’s likely that you’re already using WPA2 but some businesses neglect to upgrade their infrastructure – so it’s worth checking to be sure. You can read more about WEP versus WPA in our guide .

You can protect your Wi-Fi network from breaches by hackers by changing the name of your wireless access point or router, also known as the Service Set Identifier (SSID). You can use a complex Pre-shared Key (PSK) passphrase for additional security.

9: Ensure a strong password policy

Ensure that all employees use a strong password on all devices that contain sensitive information. A strong password is at least 15 characters in length – ideally more – and contains a mix of upper- and lower-case letters, numbers, and symbols. The more difficult it is to crack a password, the less likely a brute force attack will be successful.

You should also put in place a policy to change passwords at regular intervals (at least quarterly). As an additional measure, small businesses should enable multi-factor authentication (MFA) on employees' devices and apps.

10: Use password managers

Using strong passwords which are unique to every device or account quickly becomes difficult to remember. The need to remember and type out lengthy passwords each time can also slow your employees down. That’s why many businesses use password management tools.

A password manager stores your passwords for you, automatically generating the correct username, password and even security question answers that you need to log into websites or apps. This means users only have to remember a single PIN or master password to access their vault of login information. Many password managers also guide users away from weak or re-used passwords and remind you to change them regularly.

11: Use a firewall

A firewall protects hardware as well as software, which is a benefit to any company with its own physical servers. A firewall also works by blocking or deterring viruses from entering your network. This is in contrast to an antivirus which works by targeting the software affected by a virus that has already gotten through.

Ensuring a firewall is in place protects your business's network traffic – both inbound and outbound. It can stop hackers from attacking your network by blocking certain websites. It can also be programmed so that sending out sensitive data and confidential emails from your company’s network is restricted.

Once your firewall is installed, remember to keep it up-to-date. Check regularly that it has the latest updates for software or firmware.

12: Use a Virtual Private Network (VPN)

A Virtual Private Network provides another layer of security for your business. VPNs allow employees to access your company’s network securely when working remotely or travelling. They do this by funnelling your data and IP address through another secure connection in between your own internet connection and the actual website or online service you need to access. They are especially useful when using public internet connections – such as in coffee shops, airports, or Airbnb’s – which can be vulnerable to hackers. A VPN gives users a secure connection which separates hackers from the data they are hoping to steal.

13: Guard against physical theft

While you need to be mindful of hackers trying to breach your network, don’t forget that your hardware can be stolen too. Unauthorized individuals should be prevented from gaining access to business devices such as laptops, PCs, scanners, and so on. This may include physically securing the device or adding a physical tracker to recover the device in case of loss or theft. Ensure all your employees understand the importance of any data that might be stored on their cell phones or laptops when out and about.

For devices used by multiple employees, consider creating separate user accounts and profiles for additional protection. It’s also a good idea to set up remote wiping – this allows you to remotely delete the data on a lost or stolen device.

14: Don’t overlook mobile devices

Mobile devices create security challenges, especially if they hold sensitive information or can access the corporate network. Yet they can sometimes be overlooked when businesses are planning their cybersecurity. Ask your employees to password-protect their mobile devices, install security apps, and encrypt their data to stop criminals from stealing information while the phone is on public networks. Be sure to set reporting procedures for lost or stolen phones and tablets.

15: Ensure third parties who deal with you are also secure

Be wary of other businesses such as partners or suppliers who may be granted access to your systems. Make sure they are following similar practices to you. Don’t be afraid to check before you grant access to anybody.

What to look for in a cybersecurity company

For many small businesses, cybersecurity is not necessarily their core focus. It’s understandable if you need help with cybersecurity – after all, you have a business to run. But how do you know what to look for in a cybersecurity company? Here are some key attributes to look out for:

Independent tests and reviews: A cybersecurity company could dazzle you with technical jargon and an impressive marketing campaign, so it’s important to look at independent tests and reviews. The best cybersecurity firms want their products tested and are happy to share the results.

Avoid cheap options: You want to avoid a company that comes in, installs software and then disappears. Additionally, a company claiming to specialize only in one field without offering additional products or support can't provide the protection you need.

Extra support: Whether a threat has been detected or you are having trouble backing up your files, you want a company that offers a decent level of support. Choose a company that helps you navigate threats, finds solutions, and takes the hassle out of cybersecurity.

Growth potential: As your business grows, you need a cybersecurity company that can grow with you. Focus on companies that offer a full range of security systems for businesses, including those you may need in the future.

Small business owners have always had long to-do lists, but now, cybersecurity is at the top of the list. Fortunately, there are steps you can take to protect your small business, and the right cybersecurity company can help mitigate your risks.

Kaspersky Endpoint Security received three AV-TEST awards for the best performance, protection, and usability for a corporate endpoint security product in 2021 . In all tests Kaspersky Endpoint Security showed outstanding performance, protection, and usability for businesses.

Take action

Report an antitrust violation
File adjudicative documents
Find banned debt collectors
View competition guidance
Competition Matters Blog

Slow the Roll-up: Help Shine a Light on Serial Acquisitions

View all Competition Matters Blog posts

We work to advance government policies that protect consumers and promote competition.

View Policy

Search or browse the Legal Library

Find legal resources and guidance to understand your business responsibilities and comply with the law.

Browse legal resources

Find policy statements
Submit a public comment

Vision and Priorities

Memo from Chair Lina M. Khan to commission staff and commissioners regarding the vision and priorities for the FTC.

Technology Blog

Avoiding outages and preventing widespread system failures.

View all Technology Blog posts

Advice and Guidance

Learn more about your rights as a consumer and how to spot and avoid scams. Find the resources you need to understand how consumer protection law impacts your business.

Report fraud
Report identity theft
Register for Do Not Call
Sign up for consumer alerts
Get Business Blog updates
Get your free credit report
Find refund cases
Order bulk publications
Consumer Advice
Shopping and Donating
Credit, Loans, and Debt
Jobs and Making Money
Unwanted Calls, Emails, and Texts
Identity Theft and Online Security
Business Guidance
Advertising and Marketing
Credit and Finance
Privacy and Security
By Industry
For Small Businesses
Browse Business Guidance Resources
Business Blog

Servicemembers: Your tool for financial readiness

Visit militaryconsumer.gov

Get consumer protection basics, plain and simple

Visit consumer.gov

Learn how the FTC protects free enterprise and consumers

Visit Competition Counts

Looking for competition guidance?

Competition Guidance

News and Events

Latest news, ftc supports usda’s efforts to protect farmers, growers, ranchers, and consumers from unlawful conduct by dominant meat processors.

View News and Events

Upcoming Event

Scheduling conference, in the matter of asbury automotive group, inc. et al..

View more Events

Follow us on social media

Noncompete Rule: What You Should Know

Visit the Noncompetes feature page for more information, including factsheets featuring stories on how the rule can benefit Americans.

Latest Data Visualization

FTC Refunds to Consumers

Explore refund statistics including where refunds were sent and the dollar amounts refunded with this visualization.

About the FTC

Our mission is protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.

Learn more about the FTC

Meet the Chair

Lina M. Khan was sworn in as Chair of the Federal Trade Commission on June 15, 2021.

Chair Lina M. Khan

Looking for legal documents or records? Search the Legal Library instead.

Cases and Proceedings
Premerger Notification Program
Merger Review
Anticompetitive Practices
Competition and Consumer Protection Guidance Documents
Warning Letters
Consumer Sentinel Network
Criminal Liaison Unit
FTC Refund Programs
Notices of Penalty Offenses
Advocacy and Research
Advisory Opinions
Cooperation Agreements
Federal Register Notices
Public Comments
Policy Statements
International
Office of Technology Blog
Military Consumer
Consumer.gov
Bulk Publications
Data and Visualizations
Stay Connected
Commissioners and Staff
Bureaus and Offices
Budget and Strategy
Office of Inspector General
Careers at the FTC

Protecting Small Businesses

As a small business owner, you have a lot on your mind. You can’t afford to lose time or money to scammers or a compromised network. We can help you avoid scams, protect your computers and networks, keep your customers’ data safe – and protect your bottom line. You also can find out what the FTC is doing to protect small businesses . Stay connected by subscribing to the FTC’s Business Blog . Find information for small business in Spanish at ftc.gov/pequenosnegocios.

Cybersecurity

	and make it part of your business routine.
	Develop a plan to
	Learn what do if there is a .

Scams and Your Small Business

	Learn about scams that .
	and share them with your colleagues.
	and learn more about scams targeting small business.
	Report scams against small business at .

Cybersecurity Video Series
Scams and Your Small Business Video Series
Build Security into Development
Control Access to Data
Data Breach Response
Defend Against Ransomware
Fraud - An Inside Look (short version)

Plain Language Guidance

Data Breach Response: A Guide for Business
Featuring Online Customer Reviews: A Guide for Platforms
Getting Business Credit
Informing Businesses about the INFORM Consumers Act
Merchants Beware: New “Free Money from the Government” Scam May Cost You

View more Plain Language Guidance

Special Delivery for Adoption Intermediaries: No Tolerance for Deception September 10, 2024
Gig work company to pay $7 million to settle FTC charges involving deceptive earnings claims and Business Opportunity Rule violations July 2, 2024
Small businesses: FTC has your back this week – and every week April 30, 2024
Small business people are among those getting $100 million back due to FTC action challenging Benefytt Technologies’ sham health plans March 19, 2024
Time lapse? $33 million FTC damages settlement with Biz2Credit addresses deceptive claims to small businesses about average processing time for loans March 18, 2024

View more Blog posts

FBA Machine/Passive Scaling, FTC v. August 8, 2024
RCG Advances, LLC February 14, 2024
Fleetcor Technologies, In the Matter of January 29, 2024
Yellowstone Capital LLC, FTC v. June 21, 2022
Dun & Bradstreet, Inc., d/b/a D&B April 7, 2022

View more Cases

Credit cards
View all credit cards
Banking guide
Loans guide
Insurance guide
Personal finance
View all personal finance
Small business
Small business guide
View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

7 Tips to Protect Your Small Business From Cyberattacks

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Cyberattacks like the 2017 Equifax data breach put the personal data of millions at risk. Small businesses, with less security protection and fewer resources dedicated to cybersecurity compared with larger corporations, are an easier target for hackers.

Small businesses face an average annual cost of $34,604 on cyber-related incidents, and only 52% of small businesses have a strategy around cybersecurity, according to a 2018 report by Hiscox, an insurance provider.

Here's information on cyberattacks, and seven tips to protect your small business.

» MORE: Equifax data breach settlement guide

What is a cyberattack?

A cyberattack is an unauthorized attempt to expose, destroy or access your data. Forty-seven percent of small businesses suffered at least one cyberattack in the past year, according to the Hiscox report.

Here are three common types of cyberattacks.

Malware: Short for "malicious software," malware acts against the intent of the user, and can come in the form of a virus, Trojan horse or worm.

Ransomware is a form of malware that demands money to avoid a negative consequence, such as permanently deleting your data or publishing it publicly.

Phishing: This is when scammers send fraudulent emails or text messages that may look like they’re from a reputable company, like your bank or credit card provider.

Phishing scams often tell you to click a link or open an attachment, and can then steal sensitive data, such as your credit card or website login information.

Man-in-the-middle attack: This type of attack happens when scammers secretly intercept communication between two parties to steal login credentials or account details.

Man-in-the-middle attacks can occur in areas with free public Wi-Fi hot spots, as scammers may set up fake Wi-Fi connections with names that sound similar to a nearby business. Once you’ve connected to the scammer’s Wi-Fi, they can monitor your online activities and steal your personal information, according to Symantec Corporation.

How to protect your small business from cyberattacks

1. get educated.

National Cyber Security Awareness Month (NCSAM), held every October, raises awareness about the importance of cybersecurity. The NCSAM toolkit offers tips and resources to protect against cybersecurity threats.

The SBA also offers a self-guided online course in cybersecurity basics.

2. Create a cybersecurity plan

Your cybersecurity plan should include an employee training program and an incident response plan. The first step to securing your network is to make sure your employees understand security policies and procedures.

Training shouldn’t be a one-and-done deal; schedule yearly or semi-yearly refresher courses to keep security top of mind. Help your employees understand the importance of updating their software, adopting security best practices and knowing what to do if they identify a possible security breach.

The faster you act in the face of a cyberattack, the better you’ll be able to mitigate the damage.

An incident response plan will have crucial information such as:

Whom to contact.

Where data and data backups are stored.

When to contact law enforcement or the public about a breach.

The Federal Communications Commission offers a cyberplanner to help small-business owners create a plan to protect their business. (You can generate a customized plan at the bottom of the page after you create it.)

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

3. Be smart about passwords

The National Institute of Standards and Technology (NIST) advises government agencies on password best practices. According to the organization’s Digital Identity Guidelines, NIST recommends passwords be at least eight characters long and notes that length is more beneficial than complexity. Allow your employees to create long, unique passwords that are easy for them to remember.

If you deal with highly sensitive data, you may want to require multifactor authentication, which requires users to present at least two identifying factors, like a password and a code, before gaining access to systems or programs. Think of it like an ATM, which requires a combination of a bank card and a PIN to access funds.

4. Increase your email security

Nearly half of all malicious email attachments come from office files, according to Symantec’s 2019 Internet Security Threat Report.

Basic email safety precautions, like not opening suspicious attachments or links, are a first step that can be covered in your employee training plan. If you deal with clients’ personal data, you can also encrypt documents so both the sender and the recipient need a passcode to open it.

5. Use a firewall and antivirus software

A firewall acts as a digital shield, preventing malicious software or traffic from reaching your network. There are many kinds of firewalls, but they fall into two broad categories: hardware or software.

Some firewalls also have virus-scanning capabilities. If yours doesn’t, be sure to also install antivirus software that scans your computer to identify and remove any malware that has made it through your firewall. It can help you control a data breach more efficiently by alerting you to an issue, instead of your having to search for the problem after something goes wrong.

6. Secure your Wi-Fi network

Wi-Fi equipment is not secure when you first buy it. Your device comes with a default password, but make sure your network is encrypted with your own, unique password. Your router will likely allow you to choose from multiple kinds of passwords; one of the most secure is a Wi-Fi Protected Access II (WPA2) code.

You’ll also want to hide your network, meaning the router does not broadcast the network name. If customers or clients will need access to Wi-Fi, you can set up a “guest” account that has a different password and security measures, which prevents them from having access to your main network.

7. Protect your payment processors

It’s crucial to work with your bank or payment processor to ensure that you’ve installed any and all software updates. The more complex your payment system, the harder it will be to secure, but the Payment Card Industry Security Standards Council offers a guide to help you identify the system you use and how to protect it.

More from NerdWallet: Identity theft and cybersecurity guide

On a similar note...

American Express® Business Checking

BreachSight

Vendor risk, trust exchange, product features, vendor risk assessments, security questionnaires.

Security Ratings

Data Leaks Detection

Integrations

AI Autofill

Financial Services

eBooks, Reports, & more

10 ways to reduce cybersecurity risk for your organization.

Axel Sukianto

A complete guide to cybersecurity.

Download this eBook to learn how to protect your business with an effective cybersecurity program.

‍ Cybersecurity breaches have been on the rise, and it's expected that by 2023, they'll have grown to 15.4 million . While technological advancements have made it easy for organizations to upgrade their security measures, malicious hackers are now using sophisticated tools. This means that in addition to implementing strict cybersecurity policies, you also have to take proactive measures to reduce your cybersecurity risks.

Download our guide on scaling third-party risk management despite the odds

As an organization, you can't afford to leave your data security up to chance. The business impact could be astronomical, it could result in lost revenue, operational disruption, and stolen customer data. Data breaches also cause reputational damage that, in some cases, could take you out of business. So, with everything that's at risk, how can you reduce cybersecurity risk for your organization ? Here are 10 practical strategies that you should implement.

1. Encrypt Your Data and Create Backups

Make sure all your sensitive data is encrypted . Saving your data in normal-text format only makes it easy for hackers to access. Data encryption, on the other hand, limits data access to parties that have the encryption key. It also ensures that even when unauthorized parties gain access to the data, they can't read it. Some data encryption software even lets you know when other people try to alter or tamper with the information.

You should also conduct regular backups for your important information. Sometimes cybersecurity breaches can result in data loss. When this happens, and you don't have a reliable and secure backup, it could result in operational disruptions that could cause your organization a lot of lost revenue. One of the most effective data backup strategies is the 3-2-1 rule . Based on this strategy, you should have at least 3 copies of your data stored. 2 of them should be stored on different media, and one should be in an offsite location.

2. Conduct Regular Employee Training

One of the common ways malicious hackers gain access to your database is through phishing emails sent to your employees. In fact, statistics show that over 3.4 billion phishing emails are sent globally. These emails contain malicious malware in the form of links that give hackers access to user data, including login credentials.

Phishing emails are often hard to detect as they seem legitimate. For instance, a hacker may send an email impersonating leaders in the organization asking for personal details . Without proper training, the employee may end up divulging this information. This is why it's vital that you conduct cybersecurity awareness training. Let your employees know of the main forms of cybersecurity attacks and the best ways to prevent them.

You should also emphasize the importance of checking email addresses before replying to them and checking links before clicking on them. Finally, don't forget to highlight the organizational policy when it comes to sharing sensitive information, even on social media.

3. Keep Your Systems and Software Updated

Software and system updates highly impact your cyber security and digital safety. This is because they not only add new features but also fix bugs and help patch security flaws and vulnerabilities that can be exploited.

Malicious hackers write code that they use to exploit the vulnerabilities. Most of the time, this code is packaged in the form of malware which can affect your entire system. So, make sure you use a patch management system to automatically manage all updates and uphold information security.

4. Use Strong Passwords

Here's an interesting fact; o ver 80% of organizational data breaches result from weak passwords . Hackers don't need much to gain access to your systems. They only require a small gap, and they'll exploit it fully.

Password cracking technology has greatly advanced, and simple passwords don't cut it anymore. Instead, you need to use complex passwords and deploy multi-factor authentication strategies to discourage cybercrime in your organization. You should also discourage password sharing among employees so that even if one desktop is hacked , the rest remain secure.

Some of the security risk mitigation strategies you should implement when it comes to passwords include;

All passwords should contain at least 8 characters.
They should contain alphanumeric characters.
They shouldn't contain any personal information.
They should be unique and never used before.
They should ideally not have any correctly spelled words.

Don't forget to keep your password safely stored in an encrypted format.

With many employees now working from home, bring-your-own-device (BYOD) is becoming increasingly common. Advise iOS users to enable the Security Recommendations feature to monitor the strength of their saved passwords.

5. Assess and Monitor Your Vendors

Chances are that your cyber security is highly dependent on third-party vendors, which is why you can’t afford to ignore vendor risk management . This will help you mitigate third-party risk instead of solely relying on incident response.

Your main focus should be on:

Cybersecurity risk: onboard vendors using the right strategies and monitor them throughout your relationship.
Legal, regulatory, and compliance risk: ascertain that the vendor will not impact your compliance with regulations, agreements, and local legislation.
Operational risk: if the vendor is a critical aspect of your organization, ensure that they won't disrupt your operations.
Strategic risk: ensure the vendor will not impact your ability to meet your organizational objectives.

Don't leave your cybersecurity to chance, so make sure you manage your third-party exposure as soon as possible.

6. Reduce Your Attack Surface

Your attack surfaces are the vulnerabilities or entry points that malicious hackers can use to access sensitive data. They could be anything like IoT , software, web application systems, and even employees that are often susceptible to social engineering attacks such as whaling and phishing .

There are 3 main types of attack surfaces :

Physical attack surface: this includes organizational assets that a hacker can get if they have physical access to your premises.
Digital attack surface: these are assets that are accessible through the internet and live outside a firewall. Digital attack surfaces include known assets such as your corporate servers/ operating system, unknown assets such as a forgotten website, and rogue assets such as apps that impersonate your company.
Social engineering attack surface: this is one of the most critical yet often overlooked attack surfaces. In this case, the hackers exploit human psychology and manipulate your employees into divulging sensitive information.

Make sure you conduct an attack surface analysis to determine your threat landscape , identify all your security gaps and reduce the attack vectors .

7. Pay Close Attention to Physical Security

Most organizational cyber risk management policies focus on the digital aspect of cyber risks and entirely neglect their physical premises. Conduct a security assessment and determine whether your critical infrastructure is safe from security breaches. You should also analyze your data protection policy and decide whether or not it has data disposal strategies.

Think of a scenario where your online systems are safe from cybercriminals, but you experience a breach because someone broke into your offices and rummaged through your file cabinets. That would be tragic! There are even other instances where janitors go through the garbage and obtain customer and employee personal information.

If you have any restricted areas, make sure they are protected using high-value systems. You should also use 2-factor authentication such as keycards and biometrics . This way, even if the keycard is lost or stolen, no one will be able to access the area.

8. Put a Killswitch in Place

Having a killswitch protects you from large-scale attacks. It is a form of reactive cybersecurity protection strategy where your information technology department shuts down all systems as soon as they detect anything suspicious until they resolve the issues.

Most of the time, cybercriminals don't cover their tracks, especially when they don't expect to be caught. So, have your IT security teams analyze all server logs frequently and conduct cybersecurity framework audits to make sure their integrity is intact. You should also invest in network forensic analysis tools that analyze information flow through your network.

Most malicious firewall and ransomware attacks are a result of human error. Some of them are even caused by your employees. In fact, statistics show that around 94% of organizations have suffered cyber security threats due to insider breaches. Make sure you scan all new hires to ascertain that they aren't a cyber risk to your organization. You should also put measures to discourage employee negligence, which is a major contributor to cyber risks.

9. Install Firewalls

Cyber security threats are becoming more sophisticated, and everyday hackers come up with new ways of accessing data. So, you should defend your networks from cyber attacks by installing firewalls. A reliable system will effectively protect you from brute attacks or prevent security incidents from causing irreversible damage.

In addition to this, firewalls monitor your network traffic to identify any suspicious activity that could compromise your data integrity. They also prevent complex spyware from gaining access to your systems and promote data privacy.

Be very careful when choosing the right firewall for your organization. Go for a system that gives you full security control and visibility of your application and networks. It should also have protection and prevention capabilities as well as a streamlined security infrastructure.

10. Create A Secure Cybersecurity Policy

Your organization's cybersecurity is highly influenced by the policies that you have in place. Do you have guidelines for data breach prevention and detection ? How often do your IT teams conduct risk assessments or penetration testing? It all starts with your guidelines!

Go through your existing policies and identify any loopholes they may have. Some of the guidelines you should have in place include;

Disaster recovery : If a breach occurs, a disaster recovery plan ensures that your employee and IT teams know the next course of action. It's aimed at reducing the amount of time that you are offline, thereby ensuring that your operations resume as soon as possible.
Access control/management : this policy highlights the parties that can access sensitive information, reducing the risk of unauthorized access. Data mishandling has both financial and legal consequences, so make sure your access management policy specifies which stakeholders are allowed access to what and under which circumstances they can share this information.
Security testing : the policy should state the frequency of your cybersecurity tests. This allows you to uncover vulnerabilities before it’s too late. Some of the security tests that you should conduct include; vulnerability scanning, security posture assessment, penetration testing, ethical hacking, cybersecurity assessments, etc.
Incident response plan : this is documentation of the steps and procedures that should be implemented in case of a breach. It also highlights the responsibility of key information security players and reduces your organization's response time. Learn how to create an Incident Response Plan >

Make sure your plan also has a clause that highlights the consequences of data mishandling as well as the legal steps that will be taken on employees that are the cause of a breach. This will discourage insider attacks.

Tips to Develop Your Cyber Risk Management Strategy

In addition to these 10 ways to reduce your cybersecurity risk, consider these tips when developing your cyber risk management strategy.

Protect Your Organization From Cybersecurity Risks Today

During the first half of 2021 alone, over 118 million people were impacted by data breaches. In fact, statistics of this year’s data breaches were significantly higher than those of the past year. The best way to ensure that your organization is safe is by taking proactive measures. This includes:

Creating data backups and encrypting sensitive information.
Updating all security systems and software.
Conducting regular employee cybersecurity training.
Using strong and complex passwords.
Installing firewalls.
Reducing your attack surfaces
Assessing your vendors
Having a killswitch in place.
Creating solid cyber risk policies and strategies.
Protecting your physical premises.

Reviewed by

Kaushik Sen

Ready to see upguard in action, ready to save time and streamline your trust management process, join 27,000+ cybersecurity newsletter subscribers.

What are security ratings cybersecurity risk scoring explained.

How to Manage Third-Party Risk in a World of Breaches

What is third-party risk management (tprm) 2024 guide, introducing upguard's new sig lite questionnaire.

Scaling Third-Party Risk Management Despite the Odds

11 third-party risk management best practices in 2024.

UpGuard Vendor Risk
UpGuard BreachSight
Product Video
Release notes
SecurityScorecard
All comparisons
Security Reports
Instant Security Score
Third-Party Risk Management
Attack Surface Management
Cybersecurity

Intellectual Property Explained

5 min. read

Updated January 5, 2024

Download Now: Free Business Plan Template →

Do you have intellectual property? A creative work or invention that could be legally protected and provide a competitive advantage for your business?

It’s worth taking the time to find out if you’re unsure.

The worst thing you can do is not know if you have IP, fail to protect it, and lose it.

Let’s explore the basics of intellectual property and how you can protect it.

*Disclaimer: This content is intended to be general information and does not constitute legal advice. Please consult an attorney before making any intellectual property or other legal decisions.

What is intellectual property?

A thought or notion floating around your head may be a great idea for a future product or service, but it isn’t yet intellectual property.

In the simplest terms, intellectual property (IP) pertains to things you create with your mind; not the ideas themselves, but the expression of the ideas. Names, designs, logos, automated processes, software, books, articles, music, etc., are all potential IPs.

For a business, IP is an asset. It provides tangible value like equipment, inventory, or other physical possessions. And like your physical assets, IP should be monitored and protected differently.

There are four primary ways to protect your IP:

Trademarks (including design rights)
Trade secrets

Intellectual property mistakes to avoid

Avoid common missteps such as thinking you don’t have IP, falsifying dates, or believing that registering IP isn’t a big deal.

How to protect IP when outsourcing software development

You may need to work with outside vendors or partners to get your business up and running. But how do you protect your intellectual property if it circulates outside your business?

What is a trademark?

A trademark is the words, numbers, symbols, or unique packaging that distinguishes your brand.

Once registered, you can use the registered ® logo to notify the public that you own the symbol or name.

In the United States, you can also mark a trademark with a TM symbol, which means you claim an unregistered trademark.

If another company uses your trademark, you can sue for trademark infringement or take legal cease-and-desist action against them. If the trademark is not registered, the lawsuit will be more difficult.

Why trademarking is important

Learn the importance of conducting a trademark search, why different trademarks matter, and what it means if denied.

How to register for a trademark

Learn how to apply for a trademark on your own or with the assistance of an attorney.

Domain names and trademark law

You’ll want to review outstanding trademarks before selecting a domain name. Otherwise, you may unintentionally run into legal conflicts.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

What is a patent?

Patents protect new inventions and cover how things work, what they do, how they do it, what they are made of, and how they are made.

Patent protection is an act of the federal government and has to do with interstate commerce. Once a patent is approved, it provides you with exclusive rights to produce a product or use a process for up to 20 years.

If someone profits from claims to an invention you have duly registered with the U.S. patent office—your patent protection allows you to sue.

Should you patent your idea?

Learn what qualities make an idea patentable and how to know if it’s the right time to file.

What to know before filing a patent

Become familiar with the patent application process before you file for a patent on your own.

How to profit from your patent

How do you make money from a patent? Starting a business is the obvious choice, but there are actually several other ways to use your patent for a payday.

Large corporation patent strategies to use

By paying attention to the market, exploring broader protection, and investing in internal legal roles—you can find the same success using patents as a large and established corporation.

How to file patents in multiple countries

If you’re selling internationally, you likely need additional patents to protect your business outside of the U.S. Learn the basics of filing for and landing patents in several countries.

What is copyright?

Copyright protects the actual expression of ideas, not the idea itself. The copyright terms can vary but generally last at least 50 years after the author’s death.

According to the U.S. Copyright Office, a visual copyright notice should contain three elements:

The symbol ©, the word “Copyright,” or the abbreviation “Copr.”
The year of first publication
The name of the copyright owner
What are trade secrets?

Trade secrets Protect confidential and proprietary information like customer lists, manufacturing processes, secret ingredients, etc. Trade secret protection lasts as long as steps are taken to maintain secrecy.

How to protect trade secrets

Physical security is essential if you have material qualifying as a trade secret or a prototype you are considering patenting.

Keep any sensitive documents like recipes or customer lists locked away in a safe or other secure storage option, not lying around on a desk for any enterprising thief to find. For any prototypes you may have, ensure that anything you don’t want stolen isn’t left in plain sight.

Additional legal steps to protect your business

Intellectual property can provide you with a competitive advantage when starting a business. So, don’t miss out on protecting your work, brand, or innovations by not knowing how to identify and register IP.

Contact an attorney for professional guidance if you’re unsure about any part of the registration process.

Want to learn more about how to legally protect your business? Check out these resources:

Small business insurance guide
How and where to obtain licenses and permits
Understand your tax obligations

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Table of Contents

More legal steps to protect your business

How to apply for a federal tax identification number

3 Min. Read

How to Apply for an EIN: Federal Tax ID Number

4 Min. Read

How to Create a Business Partnership Agreement

Legal requirements for UK-based businesses

17 Min. Read

The Legal Requirements to Start a Small Business in the UK Explained

Why you should register for a DBA (Doing Business As)

3 Reasons Why You Shouldn’t Wait to Register for a DBA

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

More From Forbes

Protect your business with an in-case-of-emergency plan.

Share to Facebook
Share to Twitter
Share to Linkedin

Danielle Levy Business Growth Strategist & Founder of The Boardroom League.

No one dreams that unexpected hardship could disrupt their lives and businesses, but when those things happen, you can help protect your business with what is known as an in-case-of-emergency plan (ICE plan). As business owners and leaders, we know that being prepared is not just an option—it's a necessity.

Whether you’re on vacation and fully offline, or something catastrophic happens and you need to act fast, having a solid plan can minimize the impact the issue has on your business and allow you to move forward quickly and efficiently.

I’ve seen businesses quickly adapt and pivot when the CEO knew what they needed in place to effectively maintain their business, cross-train their team and have an easy-to-find compilation of critical information. Since then, I’ve helped my clients make sure they had a complete ICE plan in place.

The Power Of Preparedness

As CEOs and business leaders, time is a precious resource. This is why it may be tempting to believe that damage control at the moment is enough, but the truth is that relying solely on reactive measures in the event of an emergency is simply not worth the risk of potential setbacks. By taking the initiative to create a comprehensive ICE plan, you demonstrate your commitment to the long-term sustainability and growth of your business, proving that your leadership extends far beyond day-to-day operations.

Compiling The Core Components For An ICE Plan

When it comes to developing an ICE plan, there should be no stone left unturned. While it may seem tedious, unexpected situations are just that: Unexpected. So, by preparing every area of your business, you can feel confident that you'll be equipped to handle any curveball life throws your way and that you can easily access all of your key information.

Basic Business Information

I recommend that you begin by compiling essential details about your business such as its legal structure, registration documents and important identification numbers. Having these foundational pieces of information readily available can be crucial in moments of crisis.

Financial preparedness is at the heart of every successful ICE plan. Keep track of your financial statements, insurance policies and other critical financial documents. Understanding your financial standing can help you make informed decisions and secure the necessary resources to weather the storm.

Communication And Contacts

Maintaining open lines of communication during a crisis is paramount. Prepare a comprehensive list of key contacts, including team members, clients, suppliers and other stakeholders. Having a clear communication strategy can prevent misunderstandings and ensure that everyone is on the same page during challenging times.

Team Member Information And Directory

I've witnessed how your team becomes your greatest asset during a time of crisis. Therefore, create a directory that includes contact information, roles and responsibilities of each team member. Assigning specific roles and responsibilities can facilitate a seamless response when adversity strikes.

Operations And Standard Operating Procedures

A well-documented set of SOPs is the backbone of a resilient business. Within this SOP, you can look to outline standard procedures for critical operations, crisis management and contingency plans. This helps ensure that even in your absence, your team can continue to execute essential tasks efficiently.

Login Information And Social Media Accounts

In today's digital age, access to online platforms and social media accounts is crucial for business continuity. Keep a secure record of login information and credentials for various platforms to avoid disruptions to your online presence during challenging times.

Implementing And Maintaining An ICE Plan

Creating an effective ICE plan doesn't have to be overwhelming. Start by organizing all relevant information into a single, accessible location. You can utilize cloud storage or physical copies to ensure easy retrieval. Create a schedule to regularly review and update your plan to reflect changes in your business and industry landscape. As your business grows and evolves, so should your ICE plan. I highly recommend conducting mock emergency drills with your team to test the effectiveness of your plan and identify areas for improvement.

Six Steps For Creating Your Plan

Now that you have compiled all of your information, it’s time to create the actual plan. Here is a six-step process for creating your ICE plan.

1. Identify your company's top priorities. You’ll want to think about every area of your business. Think about your revenue drivers and all of the tasks that the business performs daily, weekly, monthly and quarterly.

2. Brainstorm. Identify the types of situations that are most likely to happen. Go over your business plan and all of your business' activities; ask yourself a series of tough "What if...?" questions.

3. Hold a team meeting to develop your plan. Come up with a plan for dealing with each situation. What are your next steps, what resources do people need to make it happen, and what is the backup procedure?

4. Establish and document your chain of command. If, for some reason, you’re not around when a decision needs to be made, you need a DPIC (designated person in charge).

5. Review your plan. Review what SOPs need to be updated and have team members practice doing their assigned tasks.

6. Review your plan every six months. A lot can change over the course of a year, so make sure you’re prepared by revisiting your plan at least every six months.

Protect The Business You’ve Worked So Hard To Build

An in-case-of-emergency plan is more than just a precaution; it's a lifeline for your business when the unexpected occurs. With your ICE plan in place, you can rest assured that your business is well-equipped to weather any storm that comes its way. So, I recommend that you start building your ICE plan today and embrace the peace of mind that comes with being prepared.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?

Editorial Standards
Reprints & Permissions

Starting a Business

Our Top Picks

Best Small Business Loans
Best Business Internet Service
Best Online Payroll Service
Best Business Phone Systems

Our In-Depth Reviews

OnPay Payroll Review
ADP Payroll Review
Ooma Office Review
RingCentral Review

Explore More

Business Solutions
Entrepreneurship
Franchising
Best Accounting Software
Best Merchant Services Providers
Best Credit Card Processors
Best Mobile Credit Card Processors
Clover Review
Merchant One Review
QuickBooks Online Review
Xero Accounting Review
Financial Solutions

Human Resources

Best Human Resources Outsourcing Services
Best Time and Attendance Software
Best PEO Services
Best Business Employee Retirement Plans
Bambee Review
Rippling HR Software Review
TriNet Review
Gusto Payroll Review
HR Solutions

Marketing and Sales

Best Text Message Marketing Services
Best CRM Software
Best Email Marketing Services
Best Website Builders
Textedly Review
Salesforce Review
EZ Texting Review
Textline Review
Business Intelligence
Marketing Solutions
Marketing Strategy
Public Relations
Social Media
Best GPS Fleet Management Software
Best POS Systems
Best Employee Monitoring Software
Best Document Management Software
Verizon Connect Fleet GPS Review
Zoom Review
Samsara Review
Zoho CRM Review
Technology Solutions

Business Basics

4 Simple Steps to Valuing Your Small Business
How to Write a Business Growth Plan
12 Business Skills You Need to Master
How to Start a One-Person Business
FreshBooks vs. QuickBooks Comparison
Salesforce CRM vs. Zoho CRM
RingCentral vs. Zoom Comparison
10 Ways to Generate More Sales Leads

Business.com aims to help business owners make informed decisions to support and grow their companies. We research and recommend products and services suitable for various business types, investing thousands of hours each year in this process.

As a business, we need to generate revenue to sustain our content. We have financial relationships with some companies we cover, earning commissions when readers purchase from our partners or share information about their needs. These relationships do not dictate our advice and recommendations. Our editorial team independently evaluates and recommends products and services based on their research and expertise. Learn more about our process and partners here .

How to Protect Your Business From a Data Breach

Stolen information or data corruption can hurt your business by ruining your reputation and harming you financially. Here's how to protect yourself.

Data breaches are a common threat to businesses of all kinds and sizes. Stolen information or data corruption can cause irreparable harm and become a financial burden. IBM found that the cost of a data breach in 2023 was a record-breaking $4.45 million, and it took around 277 days, on average, to identify and contain a breach.

No matter the size of your business, you need to protect your information by preventing data breaches. Here are some proven strategies for keeping your data and sensitive customer information safe.

How to protect your business from a data breach

Here are four steps you can take to protect your business’s data.

1. Evaluate your security procedures.

The first step is to look at your current security protocols. Layering your security capabilities is the best approach because hackers will have to infiltrate multiple safeguards before accessing any sensitive data. Tools such as firewalls, encryption, secure file-sharing software and antivirus software protect sensitive data from falling into the wrong hands.

If your cloud-based data-storage service offers security tools , you should still configure your own safety measures. Limit cloud access to employees, and use an extra layer of protection, such as multifactor authentication or single sign-on. [Learn more about cyber insurance .]

Back up data frequently so that if a violation occurs, your system will be restored quickly and easily with the most current data. Also, conduct screening and background checks on new hires, and mandate security training. Make sure all virus-scanning software stays current, and delete any suspicious files right away.

2. Protect your cloud and data.

To develop a more comprehensive cloud security strategy, consider using a cloud access security broker (CASB). These software platforms offer continuous visibility, data security, monitoring and governance for all cloud-based file storage. The CASB data protection feature uses machine learning and user behavior to discover unauthorized users and events. The organization can then use the CASB to respond in real time, thus preventing hackers from gaining access to sensitive information. Even when you are not watching the system, the software will block any unauthorized attempts to reach your data.

Visibility is another crucial element of cloud security. CASBs alleviate visibility issues by auditing a company’s cloud services and sanctioning useful products while blocking risky ones. CASBs also provide data security capabilities, such as encryption and tokenization.

Improper configuration and weak security procedures are a growing cause of cloud data breaches. These types of leaks are often overlooked, since they usually occur because of insiders and companies’ assumptions that the cloud service providers will protect their data. In fact, based on the shared responsibility model, the user, not the cloud provider, is responsible for cloud security.

Prevent these issues by enforcing strict password policies and user access controls. Make sure your cloud data storage is private and available only to the users who need it. A CASB can also help with this by monitoring and configuring your cloud services to maximize security. This can be applied to large cloud platforms such as Amazon Web Services, Salesforce and Office 365. [Read about cybersecurity and risk management .]

The more layers of security you can add, the more protected your data will be. As with cloud technology, limit employee access with unique codes and biometrics. Only essential employees should have access to sensitive company data.

3. Train your employees to follow security procedures.

Your data security requires that employees understand your policies and procedures. Clearly define password requirements, user access rules and any other security measures. Give examples of different scenarios people use to gain information. Alert employees about telephone callers requesting personal or business information.

Although many people can spot email scams, teach employees to recognize less-obvious ones, like phishing, in which emails appear to have come from official companies but instead contain malware. View any request for sensitive information as suspicious, and warn employees not to click email attachments or links. In other words, if you did not ask for the document, don’t open it. Hackers and thieves are inventive, so alert your staff of any new schemes you hear about.

One of the most common uses for information obtained through data breaches is identity theft. You must protect yourself, your employees and your customers from becoming victims. Medical clinics are at incredibly high risk because of the confidential information they store about patients. Plus, you need protection from liability if that information gets out. Make sure all employees, and anyone else with permission to access your data, know the security procedures and follow them closely. Failure to enforce these rules leads to costly mistakes.

Data breaches take many forms, and hard-copy files are susceptible to theft, too. Institute a clean-desk policy so that no one leaves files visible at the end of the day. Make sure all employees know retention guidelines and shredding procedures. Don’t allow documents to stack up while waiting for shredding. If you cannot destroy documents quickly, hire a service to come at scheduled times to shred your unneeded files.

4. Respond when a mistake happens.

Despite your best prevention techniques, your company may still experience a data breach. Learn from data security mistakes by examining what happened. Ask yourself how the company can do a better job of protecting its information and, if necessary, win back customer trust. If a breach occurs, act within 24 hours. Designate a team of key leaders, and assign roles and responsibilities. A quick response helps employees and clients regain a sense of security.

Stay up to date on laws and regulations regarding the proper disposal techniques for sensitive files and data. Although technology allows more convenience, it also introduces dangers. Connecting more devices — like smartphones, tablets and even smartwatches — gives hackers additional ways to break in and obtain personal and proprietary data.

Keeping your company information secure, and preventing media scrutiny, involves more than one step. The days when a username and password offered enough protection are over. Make sure your company uses the latest software technology to safeguard digital data, and don’t forget to secure paper documents as well. Data security resources are a necessary part of today’s business world.

Types of business data breaches

These are a few of the most common types of business data breaches:

Malicious attacks can happen due to glitches or gaps in the cloud, vulnerabilities in third-party software and weak passwords. These attacks typically involve stolen or leaked information that hackers then sell on the black market.
Destructive and ransomware attacks involve someone destroying records or holding them for ransom. The average cost of a destructive malware breach is $4.82 million, and the average ransomware breach costs $4.54 million, according to IBM.
Nation-state attacks are less common, but they can be the most costly. These attacks happen when hackers work with a government to commit crimes against the U.S. and/or its allies.

>> Learn more: How to Create a Small Business Cybersecurity Plan

What to do if your company’s data has been breached

Here are a few tips for handling a data breach that’s affected your business.

Identify the source and extent of the breach.

First, assess what type of breach it was and what data was compromised. Businesses should have intrusion detection or prevention systems to track these things. However, it will be difficult to identify the breach and its cause without these systems or software.

Take security to the next level.

Work to fix the issue or vulnerabilities in your security systems. If the breach was the result of employee errors, such as clicking an email link that implanted a virus or using a weak password, train your employees to recognize phishing emails and other scams, and encourage them to use stronger passwords.

Talk with legal authorities.

Each state has different requirements for reporting data breaches. Contact legal authorities to discuss the breach, the time frame in which you need to inform the affected parties, and exactly what needs to be reported.

Notify those who were affected, and neutralize the breach.

Customers must be notified so they can take action to change passwords, cancel credit cards and otherwise protect themselves. Be honest, and provide context about the situation. By acting quickly, you minimize damage and loss of trust in your business.

Examples of high-profile business data breaches

Here are some noteworthy data breaches that have affected large corporations, emphasizing the importance for businesses big and small to protect data using the right security measures.

In August 2013, hackers accessed 3 billion Yahoo accounts. While they did not access any financial information from users, they did obtain security questions and answers for all of those accounts. At the time of the breach, Yahoo was being acquired by Verizon, and there were gaps in its security.

There was a massive breach of 700 million LinkedIn users’ information in June 2021. A hacker named “God User” got a host of information, including email addresses, phone numbers, locations and genders. The hacker claimed they were going to sell the information they acquired.

In April 2019, about 530 million Facebook users were affected by a cyberattack. Users’ names, phone numbers and Facebook IDs were exposed to the public. In 2021, the data was posted for free, indicating a criminal intent behind the breach. [Read about the cost of cybersecurity and how to budget for it .]

Between November 2022 and January 2023, T-Mobile reported a breach affecting 37 million accounts, revealing that a threat actor had accessed limited customer data (e.g., names, addresses and phone numbers) through an exploited API — without compromising sensitive information. The breach made T-Mobile notify federal agencies and talk to law enforcement about an investigation.

Then, T-Mobile disclosed a second 2023 data breach impacting 836 customers. Unlike the other data breach, this one exposed extensive personal data and thus led to identity-theft risks. The breach, identified between late February and March 2023, revealed details such as names, contact information, Social Security numbers and account PINs, prompting T-Mobile to reset PINs and offer two years of identity protection services.

OpenAI confirmed ChatGPT’s first breach, exposing ChatGPT Plus subscribers’ information and conversations with others. The breach occurred in March 2023, when about 1.2% of active ChatGPT Plus users had their details exposed. It resulted from a bug in ChatGPT’s open-source code, allowing user data mix-ups due to canceled requests in a specific time frame.

Megan Totka contributed to this article.

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

10 Best Ways to Protect your Business idea in South Africa

By: Author Tony Martins Ajaero

Coming up with a brilliant, cash-spinning idea is not always easy. Unfortunately, there are always people lurking around the corner looking for business ideas to steal and profit from. It is always easy to get your business idea stolen in the process of sourcing for funds, creating product prototypes, or during the process of business documentation. To avoid this, you have to take some preventive measures to prevent your business ideas from getting snatched off your hands.

1. Make Sure You Register Your Business

Registering your business would make it eligible to be recognized as a corporate entity with its own assets. It would also give you access to all the necessary licenses that you need to make your business legitimate.

2. Trademark Your idea

Trademarking involves developing a unique phrase, logo, word, design, symbol, or image for your business or product. If anyone decides to use these elements, then you can take legal action against them. Trademarking your product designs, images and logos can keep people from using them without authorization. To trademark your product in south africa, you can visit www.cipc.co.za .

Suggested for You

How to Start a Gold Mining Business in 20 Steps
How to Start a Business in South Africa Without Money
How to Register a Scrapped Vehicle in South Africa
How Long It Takes to Register a Trademark in South Africa
How Much It Cost to Start a Business in South Africa

3. Copyright Your Work

You can protect your creative work by registering it as a copyright. Copyright helps to protect your intellectual property and ideas from unauthorized copying, and prescribes the steps that must be taken should anyone decide to copy your work.

4. Apply for a Patent

You can also apply for a patent for your product or business idea with CIPRO, the organization responsible for registering patents in South Africa. When you apply for a patent with CIPRO, they check to ensure that the product idea hasn’t been patented by someone else in South Africa or in other countries in the past, then they issue you with a patent certification that shows that you now have exclusive rights to the product/idea, and no one else can use them without your permission.

You can register your patent in South Africa by visiting www.cipro.gov.za . It costs between R7,000 and R10,000 to file a patent in South Africa and afterwards, you also have to pay an annual maintenance fee of about R200.

5. Sign a Non-Disclosure Agreement

When pitching your business ideas to potential investors, you should have them sign a non-disclosure or confidentiality agreement. This document is legally binding, and prevents any of the investors from using your ideas without your permission. A non-disclosure confidentiality agreement allows you to take legal action against investors who may go against this agreement.

6. Mark Documents with Appropriate Notices

You can opt for a simple business protection approach like marking your business plans and other related documents with the word ‘Confidential’ or ‘Proprietary’. This serves as a legal warning to readers that the contents of the document are not to be copied or disclosed to third parties.

7. Protect Your Computers

You also have to protect your computers, email accounts, and social media accounts from unauthorized access by hackers. Hackers can easily break into your accounts to steal important information about your business or product ideas for themselves.

8. Sign Non-Compete Agreements

If you need to hire someone during the process of developing your business idea, for instance, if you need to hire someone to develop a product prototype for you, you should have them sign a non-compete agreement. This agreement prevents them from setting up a business similar to yours or using your business ideas in any way. You can take legal action against them if they go against this agreement.

9. Work-for-Hire Agreements

You should also have the people you hire to develop your product sign work-for-hire agreements to show that you only hired them to work for you, and they are not responsible for developing or formulating any of the ideas. This can help to protect your business in the future when it becomes successful and someone comes up to say that they were involved in developing the business or product idea.

10. Hire a Lawyer

Nothing beats professional legal advice when trying to protect your business idea from intellectual property or idea theft. A lawyer would be able to prescribe some adequate measures to take in order to protect your business.

Sometimes, when people know that you have a lawyer at your beck and call, they simply avoid messing with you in order to avoid legal battles and consequences, so always throw in some subtle hint about the fact that you have a lawyer at your beck and call during pitches and business meetings to keep intending business idea or intellectual property thieves from going through with the plans because they know that there would be legal consequences.

An official website of the United States Government

Kreyòl ayisyen
Search Toggle search Search Include Historical Content - Any - No Include Historical Content - Any - No Search
Menu Toggle menu
INFORMATION FOR…
Individuals
Business & Self Employed
Charities and Nonprofits
International Taxpayers
Federal State and Local Governments
Indian Tribal Governments
Tax Exempt Bonds
FILING FOR INDIVIDUALS
How to File
When to File
Where to File
Update Your Information
Get Your Tax Record
Apply for an Employer ID Number (EIN)
Check Your Amended Return Status
Get an Identity Protection PIN (IP PIN)
File Your Taxes for Free
Bank Account (Direct Pay)
Payment Plan (Installment Agreement)
Electronic Federal Tax Payment System (EFTPS)
Your Online Account
Tax Withholding Estimator
Estimated Taxes
Where's My Refund
What to Expect
Direct Deposit
Reduced Refunds
Amend Return

Credits & Deductions

INFORMATION FOR...
Businesses & Self-Employed
Earned Income Credit (EITC)
Child Tax Credit
Clean Energy and Vehicle Credits
Standard Deduction
Retirement Plans

Forms & Instructions

POPULAR FORMS & INSTRUCTIONS
Form 1040 Instructions
Form 4506-T
POPULAR FOR TAX PROS
Form 1040-X
Circular 230

Retirement plan and IRA required minimum distributions FAQs

Q1. What are required minimum distributions? (updated March 14, 2023)

Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually starting with the year they reach age 72 (73 if you reach age 72 after Dec. 31, 2022). Retirement plan account owners can delay taking their RMDs until the year in which they retire, unless they're a 5% owner of the business sponsoring the plan. Owners of traditional IRA, and SEP and SIMPLE IRA accounts must begin taking RMDs once the account holder is age 72 (73 if you reach age 72 after Dec. 31, 2022), even if they're retired.

Retirement plan participants and IRA owners, including owners of SEP IRAs and SIMPLE IRAs, are responsible for taking the correct amount of RMDs on time, every year from their accounts, and they may face stiff penalties for failure to take RMDs.

When a retirement plan account owner or IRA owner dies before January 1, 2020, before their RMDs are required to begin, the entire amount of the owner's benefit generally must be distributed to the beneficiary who is an individual.

within 5 years of the end of the year following the year of the owner's death, or
over the life of the beneficiary starting by the end of the year following the year of the owner's death.

For defined contribution plan participants, or IRA owners, who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant's account be distributed within ten years. This 10-year rule has an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person or a person not more than ten years younger than the employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date. The required beginning date is the date an account owner must take their first RMD.

See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) , and Retirement topics – Beneficiary for more information on when beneficiaries must start receiving RMDs.

Q2. What types of retirement plans require minimum distributions? (updated March 14, 2023)

The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.

The RMD rules do not apply to Roth IRAs while the owner is alive. However, RMD rules do apply to the beneficiaries of Roth 401(k) accounts.

Q3. When must I receive my required minimum distribution from my IRA? (updated March 14, 2023)

You must take your first required minimum distribution for the year in which you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). However, you can delay taking the first RMD until April 1 of the following year. If you reach age 72 in 2022, you must take your first RMD by April 1, 2023, and the second RMD by Dec. 31, 2023.

If you reach age 72 in 2023, your first RMD for 2024 (the year you reach 73) is due by April 1, 2025.

A different deadline may apply to RMDs from pre-1987 contributions to a 403(b) plan (see FAQ 5 below).

Q4. How is the amount of the required minimum distribution calculated?

Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) . Choose the life expectancy table to use based on your situation.

Joint and last survivor table II - use this table if the sole beneficiary of the account is your spouse and your spouse is more than 10 years younger than you.

2021 RMDs PDF
2022 RMDs PDF

Uniform lifetime table III - use this if your spouse is not your sole beneficiary or your spouse is not more than 10 years younger

Single life expectancy table I - use this if you are a beneficiary of an account (an inherited IRA)

See the worksheets to calculate required minimum distributions and the FAQ below for different rules that may apply to 403(b) plans.

Q5. Can an account owner just take a RMD from one account instead of separately from each account?

An IRA owner must calculate the RMD separately for each IRA they own but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract they own but can take the total amount from one or more of the 403(b) contracts.

However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans, must be taken separately from each of those plan accounts.

Q6. Who calculates the amount of the RMD? (updated March 14, 2023)

Although the IRA custodian or retirement plan administrator may calculate the RMD, the account owner is ultimately responsible for taking the correct RMD amount.

Q7. Can an account owner withdraw more than the RMD?

Q8. what happens if a person does not take a rmd by the required deadline (updated march 14, 2023).

If an account owner fails to withdraw the full amount of the RMD by the due date, the amount not withdrawn is subject to a 50% excise tax. SECURE 2.0 Act drops the excise tax rate to 25%; possibly 10% if the RMD is timely corrected within two years. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts , with their federal tax return for the year in which the full amount of the RMD was required, but not taken.

Q9. Can the penalty for not taking the full RMD be waived?

Yes, the penalty may be waived if the account owner establishes that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation. See the Instructions to Form 5329 PDF .

Q10. Can a distribution in excess of the RMD for one year be applied to the RMD for a future year?

Q11. how are rmds taxed.

The account owner is taxed at their income tax rate on the amount of the withdrawn RMD. However, to the extent the RMD is a return of basis or is a qualified distribution from a Roth IRA , it is tax free.

Q12. Can RMD amounts be rolled over into another tax-deferred account?

No. Please refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) , for additional information.

Q13. Is an employer required to make plan contributions for an employee who has reached age 72 (73 if you reach age 72 after Dec. 31, 2022) and is receiving required minimum distributions? (updated March 14, 2023)

Yes, you must continue contributions for an employee, even if they are receiving RMDs . You must also give the employee the option to continue making salary deferrals in a plan that permits them. Otherwise, you will fail to follow the plan's terms which may cause your plan to lose its qualified status. You may correct this failure through the Employee Plans Compliance Resolution System (EPCRS) .

Q15. How are RMDs determined in a Defined Benefit Plan? (updated March 14, 2023)

A defined benefit plan generally must make RMDs by distributing the participant's entire interest in periodic annuity payments as calculated by the plan's formula for:

the participant's life,
the joint lives of the participant and beneficiary, or
a "period certain" (see Treas. Reg. §1.401(a)(9)-6, A-3 ).
Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

Q16. What are the required minimum distribution requirements for pre-1987 contributions to a 403(b) plan? (updated March 14, 2023)

If the 403(b) plan (including any 403(b) plan that received pre-1987 amounts in a direct transfer that complies with Treas. Reg. Section 1.403(b)-10(b)):

has separately accounted and kept records for pre-1987 amounts, and
is for the primary purpose of providing retirement benefits (see the incidental benefit rules in Treas. Reg. Section 1.401-1(b)(1)(I)),

then the pre-1987 amounts (excluding any earnings or gains on such amounts):

are not subject to the age 72 (73 if you reach age 72 after Dec. 31, 2022) RMD rules of IRC Section 401(a)(9),
are not used in calculating age 70½ (or age 72 or 73) RMDs from the 403(b) plan, and
don't need to be distributed from the plan until December 31 of the year in which a participant turns age 75 or, if later, April 1 of the calendar year immediately following the calendar year in which the participant retires.

If the plan includes both pre-1987 and post 1987 amounts, for distributions of any amounts in excess of the age 70½ RMDs, the excess is considered to be from the pre-1987 amounts.

If records are not kept for pre-1987 amounts, the entire account balance is subject to the age 70½ (or age 72 or 73) RMD rules of IRC section 401(a)(9).

A potential Air Canada pilot strike could impact your travel. Here's what to do about it

Air canada could begin suspending operations as soon as this weekend.

Social Sharing

With a potential pilot strike looming, Air Canada is preparing to suspend its operations in a shutdown that could impact tens of thousands of passengers.

Canada's largest airline and the Air Line Pilots Association (ALPA), which represents more than 5,000 Air Canada pilots, are negotiating over the union's wage demands. Air Canada pilots are seeking compensation in line with what their U.S. counterparts make.

"What the airline can do is to diminish the impact on the travellers and that's what Air Canada is trying to do now," said Frederic Dimanche, a professor at Toronto Metropolitan University and the director of the School of Hospitality and Tourism Management.

Air Canada strike could leave passengers scrambling

He said that giving travellers an opportunity to reschedule their flight or offering them credits — as Air Canada is doing — is "the very minimum" the airline can do.

"I think it's important for people to be aware that a strike is potentially coming and that they need to make some arrangements."

Here's how a potential strike could impact your travel plans, and what you can do about it.

What to know about a potential strike

A strike or lockout can't take place before the 21-day cooling period that began on Aug. 27, after the pilot union voted overwhelmingly in favour of authorizing a strike.

While Air Canada and Air Canada Rouge flights would be impacted by a potential strike, Air Canada Express (which includes the Jazz and PAL carriers), are not involved in the negotiations. Their flights will continue to operate normally.

A spokesperson for Air Canada also confirmed to CBC News that flights operated by one of its airline partners (e.g. Lufthansa) wouldn't be impacted by a disruption.

Sunday, Sept. 15: Air Canada could start suspending its operations.

Sept. 15-18: If an agreement isn't reached, the airline or the union will likely issue a 72-hour strike notice or lockout notice, triggering a three-day wind down plan.

Air Canada could begin suspending flights next weekend as strike deadline nears

Both Air Canada and its low-cost subsidiary Air Canada Rouge will prepare to suspend flights over the course of three days, starting on Sunday.

If a traveller's flight is cancelled once a strike or lockout notice is issued, Air Canada will notify the passenger, who will be eligible for a full refund. But they won't be entitled to any additional compensation under the Airline Passenger Protection Regulations.

Wednesday, Sept. 18: Following the three-day wind down, a total shutdown of Air Canada's operations would start at 12:01 a.m. on this day.

After Sept. 18: Once a complete shutdown has occurred, Air Canada anticipates it will take seven to 10 days for normal operations to resume.

Making changes to your booking

Customers who booked a ticket or redeemed points for an Aeroplan flight reward on Sept. 9 or earlier — for travel scheduled between Sept. 15 and 23 — can make changes to their bookings now for free, according to Air Canada's goodwill policy.

You can rebook your flight with an Air Canada carrier (including Rouge and Express) to another date between Sept. 9 and 14, and/or between Sept. 24 and Nov. 30, 2024.

If you booked your travel through a third-party service, the airline is advising passengers to contact the travel agent or company directly.

Possible Air Canada pilot strike will disproportionately affect travellers, former COO says

If you cancel your flight.

Customers who choose to cancel their flights will get a full refund if they purchased a refundable fare. A cancellation fee could apply depending on the type of ticket purchased.

If you bought your ticket using Aeroplan points, you can cancel and have your points redeposited into your account.

If you bought a non-refundable ticket, you can get a one-time credit for future travel the next time you book with Air Canada, but there is an expiry date attached to the credit and it's non-transferable.

If Air Canada cancels your flight

The airline will notify you if your flight gets cancelled, and you'll be eligible for a full refund regardless of the fare you purchased. No cancellation fees will apply.

The airline will also try to rebook you on a different flight, though it cautions that space is limited.

The Air Canada website notes: "If you are contacted by someone claiming to represent Air Canada offering to change your booking, please be aware we will never ask for your booking reference or locator number, as we already have that information."

ABOUT THE AUTHOR

Jenna Benchetrit is the senior business writer for CBC News. She writes stories about Canadian economic and consumer issues, and has also recently covered U.S. politics. A Montrealer based in Toronto, Jenna holds a master's degree in journalism from Toronto Metropolitan University. You can reach her at [email protected].

With files from Anis Heydari, James Dunne, Reuters and The Canadian Press