by Rachel Rodgers
So you’ve been in business for a while now and you’re starting to really see the fruits of your labor. You’ve got a great set of clients or customers, steady business growth and new opportunities on the horizon. One thing you haven’t got together is the legal stuff.
Its great to reach the beautiful place in your business when your plans are actually working, but you won’t be there for long or go much further if you don’t handle your legal business. You need to make sure that your businesses legal needs are covered to protect your revenue stream, save money on taxes, avoid possible lawsuits and prevent others from stealing your intellectual property and ideas.
Don’t worry. I’m here to help you do just that by answering your top 5 small business law questions. Understanding the legal needs of your business is the first step towards taking care of those needs.
How do I know which entity is right for my business?
Whether or not you’ve formally formed a business entity, you do have one. Sole proprietorships spring into being, without filing any legal documents, the moment you start selling something. General Partnerships also spring into being when one or more persons begin working on a business together. There are a myriad of pluses and minuses attached to each business entity which may include: increased or lowered taxes, shielding of your personal assets from creditors and even your partner’s ability to acquire debt in your name. This is not something that a quick visit to LegalZoom.com can fix. You will want to consult with your attorney and accountant to determine which entity is the best fit for you and your business.
Even if you formed a business entity back when you started your business, such as an LLC or S-Corp, if you have hired employees, seen a significant increase in revenue or experienced other major changes in your business since then, it’s time to reconsider your business structure. Having the wrong business entity can mean paying more taxes and having less protection for your personal assets.
What contracts do I need to protect my business?
There are two main contracts that every business needs. The first contract is the agreement that governs your relationship with your clients or customers. This may be called a Client Service Agreement or Terms and Conditions. The benefit of this contract is that it makes sure that everyone involved in the agreement understands exactly what is going to happen, what is going to be exchanged (services, products), and what happens if something fails. Essentially it puts everyone on the same page.
The second contract you want to make sure you have is the Independent Contractor Agreement. Many small businesses rely on independent contractors to support them in their small businesses. Whether its a customer service representative or high level consultant, you need to have an Independent Contractor Agreement to govern that relationship. This is not only to manage the expectations of the parties involved but also to protect you from the IRS, who could choose to classify your contractors as employees triggering employment taxes and possibly penalties.
Why should I register the trademark for my business?
The longer you are in business the more intellectual property your business produces and the greater the value of that property. Things like logos, slogans, apps, e-books, classes, written works and visual designs are some of your businesses money-makers and identifiers of your brand. It’s important to take steps to protect those company assets. Trademark your company name, logo and slogan to ensure your company has national rights (rather than just local rights) to each of its brand elements and to prevent copycatters from unjustly benefiting from the brand recognition you’ve built up. Not to mention, your trademarks are a business asset that can increase the overall value of your company.
Do I need a lawyer and if so, how do I find a lawyer I can afford?
Having a lawyer means you can take advantage of opportunities to work with others, position your company to obtain financing and avoid trying to handle your own legal needs, which can be a major time suck (and sometimes lead to disastrous results).
Its one thing to know that your business has a better chance of thriving if you have a lawyer on your team. Its another to actually come up with the money to pay a lawyer. Its no secret that lawyers tend to be expensive, especially for a bootstrapping business. However, there are innovative lawyers using creative methods to provide accessible legal counsel for businesses from monthly payment plans for a package of services to assisted DIY.
So don’t sell yourself or your business short. Once you’re business is generating revenue, supporting you, your family and your dreams, you and your business deserve to be protected. Don’t risk losing all or even some of your hard work, creativity and money. Your business deserves better than that.
Disclaimer: This article is a resource guide for educational and informational purposes only and should not take the place of hiring an attorney. No information in this article creates an attorney-client relationship between the reader and the author.
Rachel Rodgers is an intellectual property attorney, business coach, and published author. Rodgers started her career working for state and federal judges, nonprofits, and even Hillary Clinton.
Today she’s the owner of a multi-million dollar business, mother of four, and visionary featured in publications like The New York Times, Women’s Health, Forbes, Entrepreneur, Fast Company, and on hit programs like Good Morning America, E! News and The Drew Barrymore Show. She is the founder of Hello Seven, a company dedicated to helping historically excluded people make more money.
Her nationally bestselling book, We Should All Be Millionaires: A Woman’s Guide To Earning More, Building Wealth, And Gaining Economic Power, is a powerful guide to creating abundance in your life. Rodgers shares how she went from growing up low-income to glowing up as a self-made millionaire, and how you can do it too.