Managing risk is an essential part of all business and this can be achieved legally in a number of ways including forming a limited liability company and having terms and conditions of business which include clauses that put a cap on liability.
Regardless of the size of your business you can minimise and apportion risk in all transactions through the use of legal contracts/agreements. It is also important to have a mechanism for dispute resolution with customers/suppliers/employees in contracts/agreements. A simple mediation clause requiring that any dispute would be discussed at mediation before going to court is beneficial for all parties. Shareholder/ Partnership Agreements are also important in business to cover management of the business and what should happen if one party wants to sell their share of a business or what should happen if a death occurs.