Many of us make personal resolutions at the start of a new year. But what about resolutions for your business? And specifically, those legal to-do’s that you’ve been putting off?
The New Year is the perfect time to get your business matters in order. It has to be done anyway. So get those tasks completed now when you’re refreshed and ready to start the year off big!
Here are some common tasks on a business owner’s to do list:
Create an LLC
If you have not created a business entity and you’re operating as a sole proprietor, now is a great time to consider adding more protection to your business. LLCsoffer limited liability protection by separating you from your business. If your business is sued as a sole proprietor, your personal assets are vulnerable as there is no shield from liability. LLCs create a division between your personal and business assets.
Have you been doing business without a contract? Verbal OKs and paper DM deals are not the way to do business. Use fully formed agreements that dictate the services you will provide and the fees you charge. Be explicit. Misunderstandings and disagreements occur when business owners are not clear about their intentions. Don't use just any contract you find online or copy someone else’s template. Use agreementsthat clearly reflect your business because the more precise the better the protection.
Protect Your IP
As your business grows, your intellectual property builds and gains value. Everything including your digital product, logo, program details, design technique and more is considered intellectual property. These resources are just as important as your physical business assets. You would not be able to operate without them.
So protect these valuable intangibles. Get your brand name and logo trademarked. Copyright blog posts, e-books, images and other important creative content. Use a non-disclosure agreement with business associates, independent contractors and employees who will have access to your sensitive or proprietary information.
Make that Independent Contractor an Employee
It may be time to hire an employee. If you have been working regularly with an independent contractor, particularly one located in your state, consider hiring that person as an employee.
Evaluate whether your relationship has become more employer based. For example, if you have an assistant that primarily works for you, you give them constant direction and the two of you use shared business tools or work space, your state may consider that person an employee.
Avoid tax penalties and the process of having to reclassify an independent contractor as an employee. Make it official as soon as the relationship morphs from two businesses working together to an employer-employee rapport.
Depending on the type of industry you’re in, you may or may not have some type of business insurance. Of course some professions are required to have professional liability insurance (lawyers, doctors), but what about businesses that offer physical products? A physical product may cause harm prompting the need for product liability insurance. Go over your business model and ensure that you have the coverage you need should disaster strike.
If you target European residents, it must contain a section addressing the requirements of GDPR. And note, it’s not enough to just to state that you have these GDPR protections. You must have a process in place that actually secures the data (including with 3rd parties). Be sure to allow consent withdrawal and procedures for a data breach.
Planning a move this year? Make sure that your business legally follows you to your new state. It's possible to operate in more than one state but your primary physical location will typically serve as the home state. If you have a substantial presence in another state, in most cases you will operate there as a foreign entity. In these situations there is paperwork to be filed and taxes to be paid so work with an attorney and tax professional to help your business transition smoothly.
Bring on a Partner
You’re ready to level up this year with a new partner. Great! Now do it the right way with the proper documents in place. If you’re adding an owner to your LLC, update your LLC Operating Agreement and detail ownership percentages and responsibilities.
Also update your state business records and let them know that a new owner is in town. If you’re partnering with someone on a project with beginning and end dates, get it all documented in a joint venture agreement.
Those are a few steps you may take in the New Year to get your business moving forward legally. Don’t let that paperwork collect dust. These days much of it can be completed online with state agencies. Legal Goodness provides contract templates and website terms to meet your needs. There’s no excuse not to get off to a good legal start this year. You’re ready!
Solid Legal Protection
Need a robust contract bundle? Get 15 legal templates + step-by-step videos and more inLegally Good Club.
To learn more about Legally Good Club and get tips on how to protect your business legally starting today, watch my free legal workshop.
This blog posting is provided for general informational and educational purposes only and is not provided for specific, individual legal advice.