The Top 5 Legal Checkpoints on Your Business Roadmap
Question: What do lawyers and tour guides have in common?
I’ve met my fair share of not-so-great tour guides. They can be stand-offish and not very personable. They can sound like one of Charlie Brown’s teachers and put you to sleep. If they’re really bad, you’ll just walk away having learned absolutely nothing.
The same can be said for not-so-great lawyers. As an attorney myself, I know this all too well. We can be an intimidating and boring bunch. And one of the worst-case scenarios with a lawyer is that you leave a meeting more confused than before.
But they can also be great!
Last summer, my family took a trip to Italy. It was awesome. One of the best parts of the trip was when we connected with a man named Lorenzo who gave us a tour around Tuscany.
Lorenzo was an incredible tour guide. He was friendly, engaging, and I learned so much from him! Lorenzo knew the area like a local. He provided insightful background stories we couldn’t have found on Wikipedia. He even gave us the inside scoop on where to get the best gelato (pun intended).
I’ve learned that, in order to be an excellent lawyer, I have to be like Lorenzo. I must give my clients a sense of direction. I need to provide guidance through the legal landscape around them. It’s my job to pull out the important parts of what they’re seeing and call attention to the main points of interest.
Starting a business can feel like traveling to a new place. There’s a lot of unfamiliar territory.
If you recently took the plunge into starting your own business, I feel for you. It’s exciting and terrifying and super stressful. Your attention is being pulled in a zillion different directions: websites, sales funnels, influencers, taxes, marketing, time management, SEO, etc.
The legal side of your business of things isn’t any more understandable. Google searches lead to more Google searches, and it’s easy to drown in information overload. Where do you even start?
Don’t worry. You got this! It doesn’t have to be complicated.
Here are the 5 major legal checkpoints you need to focus on with your new business.
1. Customer-facing contracts
This is an easy one to skip. “I’m just starting out, so there’s no need to get super official, right?” Nope, not right.
Look, I’ve been there. I get it. If you’re just starting out, you’re probably in the “side-hustle” zone. Which means you might be taking on some customers at a discount or as a part of a bartering arrangement. You’re not really worried about there being problems with these customers. You’re optimistic.
Optimism is awesome, but it’s time to start thinking like a business owner. If you keep putting off this important paperwork, who knows when you’ll actually get around to it. And the more customers you get, the less time you’ll have to go “back to the drawing board” and put a customer contract in place.
Having a customer contract in place isn’t just helpful to limit liability. It’s also a fantastic way to force yourself to learn more about your business and your industry. If you have a solid customer contract in place, then you have a document that shows you so much about your business. It highlights what your customers can and can’t do, it outlines how your product or service will provide value, and it gives you a clearer sense of what to do when things go wrong.
2. Business formalities
Maybe you’ve decided to become official and form an LLC or corporation. Or maybe you haven’t, and you’re running the business under your own name (AKA, acting as a sole proprietor).
When you form an LLC or corporation, and if you follow “corporate formalities,” then your business gets limited liability. This means that your personal assets are protected if you ever get sued.
Depending on your industry, you might not be too concerned about having limited liability. And hey, I’m not here to argue with you.
Whether you form an official business or not, you still need need to act like a business owner. You owe it to your business to keep a positive mindset about its growth and to expect great things. Don’t rule out an LLC formation just because it’s expensive. Create a new bank account for your business, and keep your personal and business funds completely separate.
If your website doesn’t have these pages in place, talk to an attorney who can point you in the right direction so you can get them for your business.
4. Copyrights and trademarks
There’s a lot of creativity involved in starting a business. You have to come up with a unique business name and make sure no one prevents you from using that name. You will probably want some sort of logo, and maybe even a slogan for business. All of these branding issues fall under an area of the law called trademarks.
And maybe you’re blogging. Or selling uniquely designed shirts or mugs. Or taking photographs. Or drafting an online course or coaching program. If you’re doing anything like this, then you make be making things that are protected under copyright laws.
Depending on your line of work, protecting your trademarks and copyrighted works might be especially important at the outset of your business. If you’re a creative entrepreneur, then you need to familiarize yourself with these issues.
While it’s important to keep copyrights and trademarks in mind, don’t get ahead of yourself here and let these concepts distract you from other legal issues. This happens all the time: potential clients will reach out wanting to trademark their business name, but after 15 minutes it becomes clear that they have not considered these other legal checkpoints.
5. Employee and independent contractor agreements
If your business is growing, you’ll eventually learn that you just can’t do it all alone.
Maybe you just need some one-off projects completed, or maybe you want someone to help on a recurring basis but don’t need to control exactly how they do their work. If that’s the case, you want an independent contractor.
Or maybe it’s time to bring on employees. You’ve got a clear sense of how you need them to do their jobs, and you have part-time or full-time work to keep them busy.
In either case, you should have it in writing that you’re getting this help. An attorney can help prepare a custom contract to make sure it reflects your wishes and sets the rules and expectations.
Many businesses will put off this paperwork until they are ready to hire an employee or independent contractor. This makes sense, but it’s not ideal. The last thing you want when adding someone to your team is having to hold off on everything until you can get the legal paperwork together. Last month, one my existing clients decided she wanted to add an employee to her team. Luckily, she was already on a subscription plan with my firm. We were able to put together the necessary paperwork quickly and seamlessly under that plan.
Need help navigating these checkpoints?
It can be so stressful and time-consuming to try DIY-ing your way through the law, especially as a new business owner. These 5 major checkpoints will help you prioritize where to focus your legal efforts.
For all you creative entrepreneurs out there, my firm’s Facebook group—Friends of Indie Creative Law—provides a clearer picture of these checkpoints from the perspective of creative business owners. It’s a space where creatives come together to understand the law and keep their passions protected.