Small Business Legal Strategies for Success
As a small business owner, you invest time, energy, and money into building your business. But are you doing everything you can to protect it?
In this webinar, presented in partnership with Fifth Third Bank, we explore the small business legal strategies and best practices you need to safeguard your business and ensure its long-term success, including business formation, contracts, intellectual property (IP), and insurance. This webinar will give you practical insights and strategies for protecting your small business.
Meet the Experts
Kristen is a business attorney committed to helping BIPOC, LGBTQIA+, and women entrepreneurs protect their work and themselves as their business and impact grow. She built her law practice, Herwitz Law, on paying it forward 8 years ago, reinvesting at least 10% of profits in organizations supporting women and social justice, and she now offers a DIY contract template shop in addition to her flat rate, transparent pricing for strategic legal advisor services. Kristen is a coach in AOF’s free Coaching Hub and posts legal tips on her Instagram.
Pamela is a Dominican attorney raised in NYC with over a decade of legal experience. She currently specializes in intellectual property and business law helping small businesses and entrepreneurs get the legal assistance they need to run successful and legally protected endeavors. With “knowledge is your ultimate superpower” as her mantra, she believes it is your duty to protect yourself and your business by arming yourself with all of the information you’ll need to intimately understand each aspect of your business. Pamela has her own legal practice, Pamela Rosario Law.
Small Business Legal Protections
There are many ways to protect your small business, including the legal structure or entity of your business, contracts, intellectual property considerations, and insurance. Kristen likes to think of small business legal protections as a building. Contracts are like the floorplan- they define how, when, and by whom your business is going to be built. Your business entity is like the walls of your building- it defines the legal shape of your business and keeps your business separate from your personal considerations. Intellectual Property are the things that make you building (or your business) unique. Finally, insurance is like the roof- it keeps the bad weather out.
The right legal structure for your business can have a big impact on your liability, taxes, and governance.
Choosing the right business structure can have a huge impact on your business. When selecting your business entity, it’s important to consider the following, in consultation with an attorney:
- Review your cashflow. Determine what type of business entity you can afford to have. For example, in California, the CFTB will charge you $800 each year regardless of if you make any money or not.
- Determine the risks of your business and ways to limit liability. For example if you are a beauty business, people could have an adverse reaction to your product, even if you do extensive testing. This opens you up for liability and litigation. Your legal structure can help to minimize your liability.
- Create a tax strategy. Work with a CPA or certified tax specialist attorney, to create the best tax strategy for your business.
- Know the requirements for maintaining a legal entity in your state, in terms of annual or bi-annual fees. Working with a CPA or tax accountant is really important from a legal and tax perspective, but also from an operations and financial management perspective.
- Understand your plan for business growth. Based on your goals, where does it make sense to start? For example, for tech start-ups that have big growth goals, it doesn’t make sense to start as an LLC because you will rapidly need to change to a corporation as you grow.
Contacts and Intellectual Property
From vendor agreements to employment forms, contracts are an essential tool for managing risk and ensuring compliance. Contracts are also key defining and protecting your IP. Contracts should generally include:
- Break-up Plan. One of the first things to consider with a contract is what is the break-up plan if the business relationship needs to be terminated. People tend not to refer back to a contract if things are going well, but when a relationship sours, the contract defines the responsibilities of all parties and serves as your protection.
- Payment terms. When and how will payment happen. How are payment terms enforced. As a contractor, can you get paid before you “give away the baby”?
- IP Considerations. Who owns what in terms of IP? What IP is being used? Who can own or modify that IP? The clarity of the contract agreement is essential and could mean the difference between you owning your work and someone else owning it.
- Understand the ownership structure of any content and the content use agreement
- For service providers, scope of work is key. Who is going to provide what, for how much money, and on what timeline? Make sure terms are clearly laid out terms if something goes wrong. When payment isn’t made, scope creep happens, timeline adjustments are necessary, it’s time to refer back to your contract.
- How will IP be enforced?
Even with careful planning, accidents and lawsuits can happen. While many business entities offer you limited personal protection from liability, based on the unique needs of your business, you will need to purchase insurance.
Build Your Team
Build a team of experts to help you feel confident in your business dealings.
- Start with knowing what you can DIY and what you should not DIY.
- Pamela and Kristen both recommend finding an attorney who owns their own business and who caters to small businesses (not only big businesses).
- Only use contract templates from trusted attorneys like Kristen and Pamela, and legal support organizations. You have to start where you are right now and with whatever you can afford.
- If you can’t afford to have an attorney write an entire contact for you, for example, can you at least afford to have a one-hour consultation with them where they point out red-flags issues in a contract that was not written by an attorney? Some legal advice is better than none.
Do a quarterly or monthly legal audit of your business. Take stock of where you are based on your legal foundations: business entity, contracts, IP, and insurance. An attorney could help you with this or you could do it with your internal team or by yourself. Review the legal challenges you are facing and make a plan (with a timeline) to get your pillars up to date. It’s ok to not have it all figured out right now. Make an actionable plan to strengthen your legal foundations.
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.