I want to talk to you today about building a wall of protection around your business. It’s important to build that wall before there are legal issues, so there are no legal issues. It is a misconception that you don’t need a lawyer until something goes wrong. You want to work with a lawyer so that things don’t go wrong.
In this episode we will cover:
- Your business entity
- Contracts
- Insurance
- Intellectual property
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Disclaimer:
The Legalpreneur Podcast is advertising/marketing material. It is not legal advice. Please consult with your attorney on these topics. Copyright Legalpreneur Inc 2022
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Episode 233: How to Build a Wall of Legal Protection Transcript
Andrea: [00:00:03] Welcome to the Legalpreneur podcast. I’m your host, Andrea Sager, founder and CEO of Legalpreneur Inc. As a serial entrepreneur and someone that works exclusively with small business owners legally protecting their business, I’m dedicated to covering common legal issues faced by business owners, providing you with the business knowledge you need to catapult your businesses growth and showing you just how some of the world’s most elite entrepreneurs have handled these legal and business issues themselves. In true attorney fashion, the information in this episode is not legal advice. This is for informational purposes only, and you should always consult with your attorney before implementing any of the information in the show. Hello. Welcome back.
Andrea: [00:00:47] I cannot wait to dive into today’s topic because I’ve alluded to this in episodes before. I’ve talked about this before, but I’ve never really completely spelled it out. And that is building the wall of protection, the legal wall of protection. But before we get into it, I want to remind you about the legal protection playbook. It is $37 learning everything you didn’t know you needed to know about. The legal side of your business comes with a one on one call with me to talk the specific legal needs of your company, because you can learn everything you need to know. But every business is different. Every business still has different needs. So we’re going to dive one on one to figure out your specific legal needs that’s in the legal protection playbook. Go to the legal Monaco $37, sign up, dive in, and we’ll chat on our one on one call. So how to build a wall of legal protection. And I want you to also think about this as a common misconception of legal protection. Most people think they need to work with an attorney when they get a cease and desist letter. They’re not going to work with an attorney until they get sued. That’s actually the not what you want to happen. And when you build this wall, you’re avoiding the cease and desist letter. Most of the time when you build this wall, you don’t have to wait for a lawsuit because it’s not going to happen because you have this protection. So think of the wall of legal protection as how you avoid the cease and desist letters, how you avoid the lawsuits, you avoid the issues, you avoid late payments, you avoid potentially not getting paid.
Andrea: [00:02:21] That’s what this wall of legal protection is. And so what I tell people is, hey, when you’re thinking about protecting your business or you’re thinking about, okay, I think I might need to chat with an attorney about my business or what legal needs I have for my business. What I tell people is, Hey, what we want to do is build a wall of protection. That means we’re laying down more bricks each time we put a new protection in place. And it’s just building the wall, making it higher. And eventually you want the wall to be so high that nobody can get over it and infringe on your business. So I am going to go over what all of those layers of bricks should be, but I just want to make sure you understand when you talk about or when you think about legal protection for your business. It’s not, Oh, I need to hire an attorney to send a letter or respond to a letter or to fight this lawsuit or hire an attorney for these legal issues. You want to work with an attorney before there are issues. You want to work with an attorney to build the wall so there are no issues. So that’s what legal protection really is. It’s protecting yourself. So there are no issues. So getting into the layers of bricks are to build your wall.
Andrea: [00:03:46] I’ve gone over these before, but number one is your entity. How are you legally operating your business? Layer one The very bottom of your wall should be your entity. Typically for small businesses, this is an LLC, a limited liability company. This protects you personally from the debts of your company. And I’m not going to go into too many details about any of these things here in this episode. We’ve done episodes about it in the past, and I’m actually going to do another deep dive in the coming weeks on each of these layers. So. Number one, you have your entity, which is an LLC for the most part. Sometimes you may want a corporation, a corporation. I tell people for the most part, if you’re going to have investors in your business, that’s when you want to think about having a corporation. However, if you’re a small business owner, closely held business, which means maybe you have one or two owners, maybe you have a silent partner, that’s when you want to make sure it is an LLC. You have more control and less maintenance, less fees involved. So layer number one, you have your entity, which is an LLC, then arguably which would come next is contracts, then possibly insurance. But we’re going to talk about those separately. In no particular order, though. We’ll just talk about contracts first. So contracts. Get it in writing. Rule number one about contracts is don’t be afraid to use them. Any time money is changing hands, that’s when you want to use a written contract.
Andrea: [00:05:28] Any time money is changing hands. On top of that, you want to think about your website, you should have a privacy policy and terms and conditions. Those go on your website no matter what. Whether they can buy something or not. Always need a privacy policy and terms and conditions. So that’s contracts. I could talk all day long, but just wait for a couple of weeks and you’ll hear about it in a podcast episode. Now, insurance. I want you to think as insurance or think of business insurance as another layer of protection. And some people want to ask, Hey, do I need an LLC if I have insurance or do I need insurance if I have an LLC? They’re not exclusive of each other. Ideally, you want to have both. Because it just gives you more protection. So think about the LLC. It protects you personally from liability from the debts of your company. That being said, it’s not stopping you from getting sued. You can still get sued. The business can still get sued. And so you start to fight that lawsuit, you still have to pay attorney’s fees. That’s when the insurance kicks in to pay for your defense. So. Llc protects you personally, but you could still get sued and you have to fight it. Insurance is there to protect you and pay for your defense. So if you’re an online business, something let’s say it was trademark infringement that you’re getting sued for. And it could be a crap case.
Andrea: [00:07:02] It could be a frivolous lawsuit, but you still have to fight it. And so what happens there is you call the insurance, and this is what happens a lot of times when clients come to me with a letter or lawsuit, whatever they get. First thing I tell them is, Hey, do you have business insurance? So let’s let’s figure out what coverage is going to kick in here, because you may not even have to pay me. That’s the insurance may pay me and settle the lawsuit, which means, let’s say the other party won. So, for example, a quick one. I had a client who was they only got a cease and desist letter from a company for copyright infringement. It wasn’t even a lawsuit. And I asked, Hey, do you have insurance? And she’s like, Yeah, I do. So I said, Hey, go ahead and call your insurance company, see what they can offer. And the other party wanted payment of like $500. And the insurance company, I talked to them and they were like, Look, we don’t even want. We don’t even want to fight this. It’s not even worth it. We’re just going to pay them the 500 and we’ll pay your fee. Great. Sounds good. So that’s what the insurance can do. And I’m not going to say they will cover every little thing. So you want to make sure what needs to be covered is covered, but always make sure you have insurance. I personally like nationwide insurance. They’ve been doing a huge push to help small business owners.
Andrea: [00:08:19] So make sure that if you don’t have business insurance, you are getting that insurance. If you need a link, I’ll put a link in my show notes for Nationwide. Now the next layer of protection is going to be intellectual property, and this could be a lot of things. So we know intellectual property is patents, copyrights and trademarks. Patents are inventions. So if you’re inventing new products, always want to make sure you have patents. If if they’re if you qualify for a patent and then that’s your layer of protection there. Then we have trademarks and trademarks. Everything that qualifies for a trademark in your business. You want to make sure you’re getting a federal registration for that. I’ll deep dive into trademarks in a few weeks, but just keep in mind, trademarks are things that identify the brand that you have. So your brand name, your logo, your slogan, a product name, your podcast name, a service name, the things that have unique names in your business. That’s what can be protected with a trademark. And what you probably don’t realize about intellectual property as a whole. It is your most valuable asset as a business owner, and so that’s why you want to make sure your intellectual property is protected with registrations. So trademarks laying down more bricks, the more trade records, the more trademark registrations that you have then copyrights. Copyrights are your creative work, your content. This is the things that you are consistently creating podcast episodes, your blog posts, your photos, videos, all of the creative work in your business.
Andrea: [00:09:59] Most likely that’s protected with a copyright. You don’t need a federal registration to have federal copyright protection. But if you ever are thinking about suing for copyright infringement, you do actually have to file and hear back from the Copyright office before you can file a federal suit for copyright infringement. And then there’s more layers that we can keep going and going. So once you start to hire, you always want to make sure you are hiring in accordance with your state laws. A lot of people get and a lot of people get contractors and employees mixed up, and sometimes it’s not even a matter of getting them mixed up. You don’t realize that you’re paying somebody as a contractor and you actually have to pay them as an employee. So every state has different rules around this. But for the most part, if you have a lot of control over what that person is doing, they probably need to be a W-2 employee. Contractors, they have more control over themselves. Essentially, they will say, Oh, I am you’ll tell the contractor I want this project done by this date. And then the contractor takes it from there and they run with the project. There’s a lot of ways to tell the difference. We’ll deep dive on that as well. I have done an episode on this in the past, so if you’re burning to go, listen to that. Just scroll back and you’ll find the episode. So there are a lot more layers to legal protection.
Andrea: [00:11:33] However, for every business, these are the layers that are involved your entity, your contracts, your insurance, your intellectual property, making sure you classify employees the right way. These are what apply to everybody. Maybe you have compliance pieces, maybe you have licenses that you have to maintain. As an attorney, I have I have to maintain my bar license. So you may have a certain license that you need to keep up with, but it varies for every business. So make sure that you are building your wall of protection and don’t get discouraged if you’re like, Wow, I have nothing. Or maybe I have one thing and I haven’t know. I’ve been in business for so long. Don’t get discouraged. Like you’re not building a wall overnight. It’s over time that you’re building this wall, but you want to make sure you are consistently building the wall because that’s how you’re going to ensure that you’re able to keep what you make. Because I’ve seen so many business owners that are making millions and over almost overnight, they lose it all because they have not protected what they’ve created. So don’t be that person. Protect what you create. Make sure you’re staying in compliance with all the laws. As always, if you need help, I’m just an email away a demo and tag me on Instagram. Please let me know if this was helpful and let me know what protections you already have. I’d love to celebrate you and you’re on Instagram. All right. I’ll see you all next time.
Andrea: [00:13:00] Here at Legalpreneur. We’re committed to providing a supportive legal community for all business owners. I know how scary the legal stuff can be. If you found this information helpful, I would be so grateful if you could share it with the fellow business owner. And quite frankly, it doesn’t cost anything to rate, review or subscribe to the show. Your support helps me reach more listeners, which allows me to support more business owners in their entrepreneurial journey. Have any questions or comments about the show? Feel free to drop me a line on Instagram. I promise. I read all of the messages and comments, and if you want to be a guest on the show or know someone that would make a great guest, simply fill out our application form and a team member will reach out if we think it’s a good fit. I’ll see you in the next episode.
