Today’s episode is a little different, because we’re talking about the legal matters entrepreneurs might not be aware of in their businesses. We're getting down and dirty on all things legal, with my guest Sarah Kornblet. Sarah is an online attorney, business owner and passionate traveler.
Sarah is super passionate about keeping your passion protected. She does so, by helping business owners better protect themselves at every stage of business growth. Her Let’s Get Legal! packages provide a strong legal foundation to build your business upon – for startups, growing businesses and pros. She also offers a la carte services for businesses looking for specific legal protections, and more affordable templates for the DIY entrepreneur who still wants comprehensive legal protection.Sarah frequently sees entrepreneurs making two major legal mistakes:
They don’t have any legal protections in place at all – “The result of that is people often end up having to learn their lessons the hard way.” This includes not having contracts ready when you meet clients, and not having the right policies to protect the products on your website. A template is one way to get yourself protected, without making a larger investment. The other big mistake is repurposing contracts and legal agreements from other businesses. Do not re-purpose other contracts for your own business. It may be copyright infringement, because contracts are licensed for individual use, and the protections aren’t guaranteed to be what your business needs.“Copyright law is such that, whenever you create something in a fixed form – so the moment you publish this podcast or hit publish on a blog post or put out a video – you are the legal owner of that content.” The difference with copyright is that, if you want to actually bring a legal action in the court of law, you have to register the copyright with the government.
If anyone steals your content after the copyright is registered, you have the rights to statutory damages and money. If you don’t register your copyright you still have rights, such as sending a cease and desist order and asking violators to remove the content, but until you register the copyright you don’t have the right to bring legal action.
“The best you can do is have things in place, register stuff. That gives you a little more protection. Be aware. Periodically do searches if you suspect someone. Chances are it’s going to happen, but you do have options when it does.”
Hiring a lawyer to draw up the standard policies and contracts that any online business needs will vary in price. A lawyer at a law firm will likely be much higher than if you work with a small business online – a single contract can be thousands of dollars compared to Sarah’s $600 contract. “What’s great is that online business lawyers are really popping up, and making things much more accessible and cheaper than the traditional route, which is something really exciting because it enables more people to be protected.”
For most service-based entrepreneurs, the most important documents you’ll need include:
One-on-one services agreement Policies on your website – A privacy policy is legally required if you are collecting email addresses or other personal information Terms of Service / Terms of Use – Explains to visitors what they can and can’t do with your information Disclaimers – Often included in the terms of service, disclaimers are very important. “You want to make sure to protect yourself from claims of liability, and disclaimers are what does that for your business.”That’s the bare minimum. Once you get into hiring virtual assistants, running group programs or building a membership site, all of those things will need their own legal agreement. As your business grows, you will need to build on the above protections.
“We all enter into legal agreements all the time that we don’t sign, and probably don’t even know about.” For one-on-one services, it’s always a smart practice to have your clients sign a contract. For any sort of group program or membership site, you can have a legal agreement or contract called Terms of Purchase.
Basically, the Terms of Purchase outlines the terms of the program or membership site: how your refund policy works, disclaimers, jurisdiction and more. Whoever is buying agrees to it at the point of purchase. “At that point, you are entering into a legal agreement whether you know it or not.”
People who are drop shipping or selling products on Amazon need additional legal protections. “One of the most important things they need to have is a solid contract in place with their manufacturer or supplier.” They really need to know what the payment terms are, what happens with damaged goods, what happens with late shipments, what are they entitled to and what they are they on the line for. People selling online also need to include a similar Terms of Sale and Terms of Use to a service-based business. “If you are not the manufacturer, you do not want to be held liable for issues with the actual product.”
Sarah believes that entrepreneurs should wait to trademark their product or brand until they are positive the name and logo will not change. “If you are investing legal dollars in a lawyer, you’re better off, at the very beginning, thinking about making sure you have the proper policies and contracts in place, and then thinking about trademarking down the road when you’ve really built a solid brand.”
“Once you start saying you’re in business, you’re in business.”
As soon as you start selling a service or product, you are a sole proprietor. You may have to register a sole proprietor and name with your state, but that won’t offer any legal protections. “Limited Liability Company (LLC) is what I usually suggest small business owners start with.” There’s no need to start a huge corporation if it’s just you selling a product online.
A registered LLC can provide a number of benefits to small business owners:
If there is a claim against you and you lose, your personal assets are protected It makes your business appear more legitimate if you are trying to get investors, partners or even customers You can get a Federal Tax ID number, which is great for a business bank account You can choose to be taxed as an S Corp It’s not a huge investment“Just starting out, LLC is definitely the way to go.”
Your business name does not need to be the same as your LLC. However, in the copyright statement at the bottom of your web page (or any other legal documents), you need to use the name of the LLC.
Sarah has done an amazing job following the success steps necessary to create a business that thrives, and she’s helping other entrepreneurs protect their passion along the way. This episode is packed full of useful, necessary information that entrepreneurs need to ensure adequate legal protections for themselves and their businesses.
SOME QUESTIONS I ASK:
What are the biggest mistakes that business owners are making time and time again, when it comes to having their legal matters in order? Does the copyright text at the bottom of a webpage protect your content? How much does it usually cost to have a lawyer draw up the standard policies that should be on your site? What legal protections do people need if they are drop shipping or selling products on Amazon?IN THIS EPISODE, YOU WILL LEARN:
The most common legal mistakes made by online business owners The legal documents every online business needs to ensure legal protection The basics of Copyright Law as it relates to content creators and online businesses How to legally protect yourself if you are drop shipping or selling products through Amazon Why Sarah suggests establishing a LLC when you are first starting an online business Plus much more…DON’T STOP HERE…
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The Bold Life Business School [Group Program] - Coming September 2016