Why All Entrepreneurs Need this Valuable Legal Checklist

Transcription:

Dayna Thomas Esq.:
Hi, everyone. I’m Dayna Thomas Esq., and welcome to Launched and Legal, where it’s my mission to help you strategize, legalize and monetize your business. I’m so excited that you’re watching because today and in every show, I’ll be sharing the best practices and tips to take your business and brand to the next level. Today, we’re going back to the basics. I’m going to be sharing my legal checklist for entrepreneurs. There’s so much to think about when starting a business, from what products or services to offer, pricing, work life balance, finances, staff, technology, and so much more one. Element that’s crucial but has a reputation of being overwhelming is the legal aspects of business. But I want to change that stigma. Lawyers are not only there to get you out of trouble or solve a dispute. Many lawyers like me, focus on helping you achieve your wildest dreams, like becoming a full-time entrepreneur. Building your business on a solid legal foundation can help you achieve that goal faster and with fewer challenges.

Dayna Thomas Esq.:
So today I’m going to be sharing my legal checklist for entrepreneurs. Now, as I’m going through this checklist, remember that there may be more legal steps that you should take depending on the operations of your business, while you should use this checklist as a guide, be sure to speak with an attorney about your specific needs. All right, on the checklist, number one, establish a business entity. Now, when you are starting a business, the name of the game is liability protection or limited liability. Essentially, what that means is that you want to make sure that the law, that creditors, whoever it may be, that has a potential risk for your business can see your business as a separate person or entity from you, because if there was ever any issue with the business, like a lawsuit or creditors that want to collect on a debt, you want to make sure that doesn’t affect you personally, so they don’t have access to your personal assets such as your house and putting a lean on your car and your personal bank account.

Dayna Thomas Esq.:
You want to make sure that you keep that separate from what you’re doing in business. And in order to do that, you have to have an actual business entity. So I normally recommend an LLC for many small businesses. Probably if you speak to me one on one, I’m going to say LLC, there are very few situations where I offer a different structure, like a corporation, a C Corp, for example. If you are just starting out your business and it’s just you, or maybe it’s just you and a partner and you’re starting out small, it’s very likely that an LLC, a limited liability company is the best structure for you and this is the reason why. We want to make sure that our liability protection is strong.

Dayna Thomas Esq.:
And while a corporation does that very well, an LLC can do that as well, as long as you are running it like a business. So be sure to keep your business funds separate from your personal funds, be sure to keep your business assets in the business name and keep your personal assets in your personal name, overall, do not co-mingle any funds. All right. So be sure to keep your contracts and things like that we’re going to talk about as well. But in order to establish that solid legal foundation, we at least need to have a business entity. Normally, I recommend an LLC, but speak with your attorney specifically to confirm that, that structure is right for you. Number two, own your logo. Now, I love teaching and talking about this and that’s owning your logo, that is related to copyright. A lot of people think, or a lot of business owners think that they own their logo.

Dayna Thomas Esq.:
And when I teach them the things that I’m going to tell you now, they are mind blown to learn that they actually don’t own their logo. So step number two on your checklist is to make sure that you own your logo. Now, sometimes we may hire someone to design a logo for us. It may be a friend, a family member, or maybe even a professional that you hire for your logo. This is what I want you to remember, whoever creates it owns it. We’re going to say that again because it is crucial for entrepreneurs to remember this as it relates to copyright. Whoever creates it, owns it. So when it comes to works of authorship or works of arts, a logo is a work of art, it’s related to copyright. And the same copyright laws apply. Whoever creates it, owns it, unless there is a contract that is signed by the creator or the designer transferring ownership to someone else such as your business.

Dayna Thomas Esq.:
Okay. So if you do not have a contract with whoever created or designed your logo, even if you helped, you want to make sure, or even if you created the idea or submitted the idea, whoever actually designed it will own the copyright to that logo. So you need to make sure that you have some type of contract, right? Not just some type of contract. We can specifically call it a copyright assignment agreement, which will transfer ownership from the designer of the logo to your business. So essentially it can be a work for hire situation. So if you are presenting them with a contract beforehand, you want to make sure that you have work for higher language in there, which means that I am hiring you to create this logo. However, I will own the copyright or my business will own the copyright as if I created it myself, right?

Dayna Thomas Esq.:
So be sure that you own the copyright to your logo because this is the real deal. If you do not have it in writing, a contract that is signed by the designer of the logo, and that person is transferring ownership of that logo from them or their company to your company, then you only have a license to use your own logo. So when your business blows up and we see that logo all over, which we will, you want to make sure that person cannot come back and say, hey, I still own that logo. I am going to revoke that license that I gave you, that implied license, and you have to pay me X amount of dollars. So start from the beginning, do it right from the beginning. You should not be nervous to present anyone with anything that’s going to help you to protect your business.

Dayna Thomas Esq.:
Number three, if you know me, you know this is one of my favorite topics. Trademark. I have learned that a lot of businesses think about trademarks way too late in their business journey. Trademarks really should be something that you are thinking about from the very beginning. I completely understand that a brand name and a logo design, all of that is a very interesting part of the business building process. It’s probably one of the most fun parts of the process is naming your business. However, I don’t want you to go crazy putting that name on products, on your website, social media, and promoting it everywhere before you even know if it’s available for you to own. Someone else may already have a trademark, not only for that exact name, but it can also be an issue if it’s for a confusingly similar name, right? So you want to make sure that this is actually a name that you can own exclusively throughout the entire United States.

Dayna Thomas Esq.:
And that is with trademark protection. So before you commit to a brand name, at least have a trademark search done to make sure that name is available for you to use. Once it’s cleared, then go ahead and follow your trademark application for your name and your logo to make sure this is actually something that you can use. The last thing that you want to do is be so excited about your business, your launch, and you’re promoting it everywhere. And your website is fantastic. And then you look in the mail and you have a seasoned desist letter for another company who’s been using that name before you, and they are giving you 30 days to rebrand or else they’re going to sue. I don’t want that to happen to you. I want you to be on a solid legal foundation from the beginning. So be sure to trademark your brand name from the beginning.

Dayna Thomas Esq.:
Number four on the checklist is have contracts with your collaborators. Now, what do I mean by collaborators? It can be your business partners, it can be investors, it can be your assistant, even virtual assistants. It can be other contractors, whoever you are hiring to assist you with your business. I’m calling a collaborator, okay? So have contracts with your collaborators. It should never be offensive that you present a contract to someone that you want to work with for your business. And if someone is offended that you present them with a contract, then they may not be the right contractor for you, okay? You want to make sure that you have as few mistakes as possible and reduce as many risks in business. Contracts are not scary. Contracts help to make sure that both parties are on the same page with expectations of what the services are. What payment is, payment schedule, termination, all of those things to make sure that the relationship can maintain to be a positive relationship and that the ultimate goal of building your business gets achieved.

Dayna Thomas Esq.:
Number five. So along the lines of contracts, have contracts with your clients. Now, if you provide a service, you definitely want to have contracts with your clients. It is something that you really should invest in for your business to have a contract that is customized specifically for your business, your policies, your procedures, your pricing, your operations, it can’t… I would not recommend for this to be something that you just grab online. This is going to be a contract that you will reuse over and over again and can really save your business from trouble if there’s a client that’s unhappy for whatever reason. So in your client agreement, you want to at least have the services that are going to be provided, payments, how much you’re going to get paid for that, your payment schedule, what happens if they don’t pay you on time, does the service terminate? Is there a late fee? You want to also include about communication with your client.

Dayna Thomas Esq.:
What if the services you’re providing is contingent on your client responding to you and responding to you in a timely manner. There’s a lot of businesses that have services drag on because communication is not up to par. So be sure to include your communication requirements, termination. If the client changes their mind and wants to fire your business, can they just do that at any time, or do they have to give you certain notice? Can they only do that if you breach the contract? Can you fire your own client, right? So we need to know the specifics of the business arrangement. It also helps for clients to feel safe. So I’m pretty sure if you present a client with a contract, they feel pretty good because they actually have things that they can hold you to when it comes to providing a service.

Dayna Thomas Esq.:
So make sure that you have a customized client services agreement for your business. Number six, your website privacy policy. Now, you may have seen on websites where there is a link on the footer of the website, usually. It doesn’t have to be, but usually it’s there where it says privacy policy for that business. Now, it is great to have a privacy policy on your website. There’s so much that you can do in order to be in data privacy compliance, but specifically, I’m going to talk about a privacy policy on your website. Now, many businesses are heavily dependent on online mediums and your website, and many businesses also collect data, collect information. Information can be an email address. It can be names. It can be credit card information that you are collecting because you are selling products online, or maybe you have a service and you’re taking a consultation fee online.

Dayna Thomas Esq.:
So you want to make sure that you have a privacy policy that states what information you’re collecting, why you’re collecting it and how you are going to keep it safe. So make sure that you have a privacy policy on your website so that your consumers can feel safe and so that you can be in compliance. Number seven, have a website terms and conditions. Now, I just mentioned about having a contract for your clients. However, I understand that if you sell goods or products, for example, it is super unrealistic for you to have every person that buys a product from you, physically sign a contract. I get it. I’m realistic. So one thing that you can do and should do is have a terms and conditions on your website. A terms and conditions acts as a contract between your consumers or who’s buying from you, or even who is visiting your website and your business.

Dayna Thomas Esq.:
And so it can lay out what the policies are for your business. So what is your refund policy? What is your policy in terms of selling to children? What is your governing law? So you may have consumers visiting your website and purchasing from all over the world. What if there was a dispute, do you have to go to them to handle that dispute or is the governing law going to be where you are? There’s a lot of terms and policies and procedures that you can put in your terms and conditions to make sure that your rules, your regulations and the policies for working with you are explicit and available to all of your consumers. So be sure that you have a terms and conditions in your website or on your website as well, that includes important information such as those that I mentioned, your refund policy, and anything else that your consumers need to know.

Dayna Thomas Esq.:
Number eight, make sure that you have a business bank account. Now, I kind of touched on this with number one, with establishing a business entity, but with a business entity, its partner is having a business bank account. Now, how can you be in compliance in terms of limited liability, if all of the business funds and all your personal funds are going into the same bank account, right? That just doesn’t make sense. So one of the easiest ways and the most common ways that entrepreneurs jeopardize their limited liability is by not having a business bank account, but not only that, not operating your business bank account as if it’s a separate person from you or a separate entity from you, can you just go into someone else’s bank account and just take out money whenever you want to, you need money for this, you need money for that.

Dayna Thomas Esq.:
And you can just take it out whenever you want. You can’t do that with another person. So the same rules apply for the other person that is your business. So there has to be rules consistency as it relates to how, and when you take money out of the business bank account, essentially as a blanket rule, any expenses for your business should come out of the business bank account and any income for your business should go into the business bank account. Okay. Keep your business bank account separate, operated separately from your individual funds, because if you commingle your money between your personal money and your business money, that is the easiest way to jeopardize your limited liability. So you don’t want to do that. I know it’s tempting, but take it from me, you want to make sure that your business bank account is run correctly.

Dayna Thomas Esq.:
Okay. Well, I hope that you learned a lot today. I love talking about my legal checklist for entrepreneurs, because a lot of times, entrepreneurs just don’t know where to start, right? So while you don’t need to do everything that I mentioned today or tomorrow, at least you have a nice guideline of what you should be thinking about. Or when you speak to an attorney, you can ask them about these specific things that I’ve mentioned. So be an educated entrepreneur, be an informed entrepreneur and make sure that you’re responsible with your legal aspects of business. Well, I hope today’s show helped to educate and inspire you as you pursue your business goals. Be sure to share today’s show with someone who can benefit and visit MyASBN.com and subscribe. If you have any questions or comments about today’s show, I would love to hear from you, send me a message or comment on Instagram at @daynathomaslaw. Remember to tune in next week and every week to make sure your business is launched and legal.