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You don’t need to do every legal task now
However, if you do these 5 small legal tasks–you are not only far ahead of most creative businesses but well on your way to legally protecting your business.
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I commonly get asked,
What legal tasks do I have to do?
No matter what kind of creative business you run, there are five must-do tasks. These tasks are crucial to building your foundation. Once you have these done, then you’ll decide which legal tasks will best support your next step on your path.
Season 2 Episode 1 Live Broadcast Replay
Season 2 Episode 1 Live Broadcast Slides
- Spark Business by Capital One
- Should I be an LLC workbook
- Sign up for the email course
- Next week’s In Session: How to quickly (and easily) create a business plan for your creative biz
Season 2 Episode 1 Live Broadcast Transcript
Good morning everyone! Happy New Year! Welcome to our very first In Session of 2018. Today we’re going to be talking about the 5 must-do tasks for every creative business.
To make sure you can hear me, can you just pop in the chat and introduce yourself? Say who you are, where you’re from, and what you do. So I can use real-life examples as we go through today. And makeup examples that may be more applicable to your business.
While we’re waiting for that, I’m going to go ahead and tell you who I am. If you don’t know, my name is Kiffanie Stahle, I am the founder of the artist J.D., which is a place designed add ease to the legalese of running a creative business.
Sarah says that she can hear and see me. Deena is here from Kansas, she’s a graphic designer and digital download artist, awesome.
In Session was something I dreamed up last year, a kind of practical workshop that would give you a couple of things that you could implement that exact day to add ease to the legal side of running your creative business. And we’re going to continue that this year. This year, we’re going to bring on a lot more experts. I’m going to do a lot more interviews, so you can get other people’s perspectives and opinions. And everything is going to be on the same theme for six weeks.
The theme to kick off the year, because we’re all thinking about goals, focuses on things that are the core and foundation of your creative business. Making sure you have that really strong foundation, so you can achieve those big goals.
Along those lines, I get asked all the time, “I don’t like the legal stuff and I don’t want to do it, what’s the bare minimum I have to do?“
Today I’m going to share with you those 5 bare minimum task that every creative business, no matter what kind of business you are, you need to tackle. And I’m going to give you some ideas and examples of how you might be able to cross those off your list as we go throughout today.
There is a button down below me that says, “Ask a question”. If you pop your questions down there, the great thing about Crowdcast is that I can tag when I start and stop answering your question. So if you want to go back to my answer and get some clarification, you can hop back to the replay. And you’ll be able to hop directly back to the answer to your question.
So without further ado, I am going to pop open the slides. As I said, today, we are going to tackle the 5 must do legal tasks for every creative business. So this is for you no matter what kind of creative business you are running. The goal of today is to not only tell you what the five tasks are but to help you evaluate which of them you need to complete. And give you some resources to make it super simple and easy for you to tackle them.
Task #1: Get your financial house in order
There are two parts to this task.
Before that, a couple of these tasks are legal-ish but definitely impact the legal side of your business. And this is one of them. They aren’t what you might think of as legal tasks. But as an attorney, when I’m working with my clients 1:1 through my law firm, if they don’t have these kinds of things done then we need to backtrack and get them done. So we can do further legal tasks. So I think of them as legal tasks.
So the first task is to get your financial house in order. And there are two parts to this task.
Employee Identification Number
The first part is obtaining an Employee Identification Number from the IRS. This number basically replaces your Social Security Number.
I know Kristen’s an illustrator, Karen an art teacher, and Deena’s a graphic designer. So all of these people are working 1 on 1 with clients. If you are paid $600 over the course of the year by any one of those clients, then for their own tax purposes they’re going to want to issue you a 1099 form. In order to issue you a 1099 form, they’re going to request that you fill out a W-9. Which is the self-employed a version of a W-2. You probably filled one out when you back when you had a 9 to 5 kind of standard job and weren’t working for yourself.
So the W-9 is the version for self-employed people when they’re working with others. To fill it out, you either need to provide your Social Security Number. So that the IRS can tie that income to your tax return like they would with the W-2. Or you need to provide them with your Employee Identification Number.
To get this number you don’t have to have employees. It’s a little bit misnamed because it makes you think that you have to have employees in order to get one. But you don’t.
Any small business can go to the IRS website and within less than 5 minutes go ahead and request that number.
There are two reasons that I think getting one is important.
One is just from the privacy or identity theft protection standpoint. It’s just being a little proactive. The less you can put your Social Security Number out there the better. I would say the vast majority of W-9’s I fill out for my clients I’m doing electronically or I’m sending them a copy of the W-9 as a PDF via email. You know your clients are probably going to do their best to protect your Social Security Number. But the bad people exist out there and hacks to the Internet all the time. And so it just kind of adds that layer of protection. So it’s great from that side.
The second benefit of having an Employee Identification Number is that it just makes your business look more professional. It is kind of this unconscious thing. Those you’re working with especially when you start to work with bigger brands and bigger businesses, they’re going to assume that you have an EIN. They’re going to assume they’ll see not a number that is three digits, two digits, four digits. But a number that’s two digits dash and then I think it’s seven digits. So they’re going to be expecting to see that kind of number. It kind of is an unconscious signal that I take my business seriously. I’m running an actual legit creative business.
It’s also number that when you do things like hire employees, when your business is making enough money that you become an s-corp, when your business goes through some of these major transitions, you’re gonna have to have one at that point. So it’s one less legal red tape that you’re going to have to tackle when you’ve got a long list of legal red tape that you’re trying to comply with.
And like I said, it takes less than 5 minutes you go straight to the IRS’ website. And they will at the end spit out a PDF with your number on it. You don’t have to wait for it in the mail. If you do a Google search, there are lots of companies that will try to make you pay lots of money to immediately get your EIN. Don’t fall for this scam. Just go straight to the IRS website. And at the very end, you’ll have the option to either mail you a letter or to have the letter spit out as a PDF. If you pick that second option, you’ll immediately have your number. So don’t succumb to the scams and pay for something you can get for free from the federal government.
So part one of task one, getting your financial house in order, is ordering that Employee Identification Number straight from the IRS.
Business Bank Account
Part two is getting a business bank account. I see far too many creative business owners running everything out of the same accounts.
And this is one of those things that is going to save you so many headaches come tax time. To know that that run you made to Target was for photo shoot supplies and therefore becomes a tax deduction on your taxes. Rather than picking up, you know, laundry detergent, or makeup, or other household supplies that you may be buying at Target. So it makes it incredibly simple to know this is an expense that is a potential deduction in my business. Because it’s attached to my business account. So it’s gonna save you a ton of headaches come tax time.
If you have this account, you’ll also know exactly what’s coming in from your business and what’s going out. And not have all of that muddled mess about personal expenses and business expenses. It’s going to help you dive much quicker into is my business actually sustainable or not. Or is this money that I’m making from my 9 to 5 job while I’m trying to grow and start my business completely and absolutely necessary because I’m losing thousands of dollars every month. And so I am really just stealing from myself, which is fine if you know that and have a plan to stop it. But it allows you to make those kinds of decisions much simpler. About how much money your business is really making. And you know how much it actually costs to run your business every month.
This second benefit goes along with what we were talking about with an EIN. If you make the leap to becoming an LLC or corporation your business will have to legally have its own bank accounts. It’s a legal requirement of LLCs and corporations.
So once again, we’re trying to preempt by doing some of these things now. Rather than when you’re making that transition. We’re pre-empting some of those long legal red tape tasks by going ahead and tackling them right from the outset.
So the two parts of task one. You’re going to go ahead and order your EIN straight from the IRS and you’re going to get your business bank account. So that is task number one.
Task #2: Cover your ass(ets)
I know Elizabeth joined us a little bit later, if any of the rest of you joined us a little bit later on, down below the slides there is a little box that says Ask a Question at the bottom of your screen. Pop your questions in there and I will answer them.
We’re going to go ahead and move on to task two of our five must do legal tasks for every creative business. This one also is a legal-ish task. And that’s making sure that you cover your assets.
Fr many of us, myself included, we work out of our home. We work out of our homes either because it’s a waste of money to pay for space. Because we are juggling childcare and running our business. Because we’ve got the space in our home and why pay for something somewhere else. Because we’re just starting and we can’t afford an outside studio even though that is our long-term plan. Because you work a regular 9 to 5 job and are trying to start your business in the evening.
So because most of us work out of our homes, there is an important provision in your renter’s and homeowner’s insurance policy that you need to investigate. And that’s because most of your renter’s and homeowner’s insurance policy are going to have an exclusion that says anything in your home that is used for business purposes is not covered by this policy. It also applies to your car if you are using your car for business purposes. Your insurance policy may not cover you if you get in an accident when you’re out running to drop orders off at the post office.
And so on task number two involves if you’ve got an existing policy, your agents. And if you don’t have a renter’s or homeowner’s insurance policy, then reaching out to a broker. And going ahead and either getting a separate business liability policy that’s going to cover all of those kinds of things. Or adding what’s called a rider to your policy to make sure that you are covered.
We’ve got people in our community, I was speaking to one of them yesterday, who was affected by the Thomas fire. And she was evacuated. Luckily her home was okay. But yesterday in the mudslides that are happening down there. There was damage to her home and her business. She sent me an email saying, “Thank you so much for telling me to do this, because now things are going to be covered.” Luckily her house survived, but now with the mudslides, there was some minor damage, not huge damage. She’s okay, things are okay.
Deena is just said that getting an EIN has been on her list for a long time, and she just went and ordered it right now while we’re talking. That is so amazing that makes me so incredibly happy Deena.
Yes dealing with insurance agents is like getting a root canal for most of us. It’s not something that super fun and exciting. But you know having that protection. Knowing that when you’re already it not able to run your business at full strength, either because there was some sort of break-in or some sort of natural disaster. Something happened to impact your business, that you’re not paying for those kinds of things out of pocket.
I’m going to hold on to Karen’s question for just one second, but it looks like we’ve got the second one from Kristen. She has a question about talking with insurance companies. She keeps running into terminology problems with insurance agents. My go-to answer for this is, I work with brokers I don’t work with individual agents. Kristin, you might reach out to Mary in our community. She’s also in the artist Courtyard. She’s also in upstate New York and just went through this process and found a broker she loves. The reason I like brokers, rather than agents, is because they can work with the vast majority of companies. And you are their clients. So they will talk you through things, help you think through things, and they will handle the terminology. You’ll just say this is what I need this is what I want to be covered, and they will then go out and shop at all. Obviously, they make a commission for doing so, but I have found that that is so much easier than trying to talk to an agent. Who only has the policies that their company offers. Insurance agents only work for a single company, where brokers can go out into the marketplace and work with you know every single insurance company that licensed in your state. That’s the other thing with insurance. It is licensed on a state by state basis. That’s the reason I recommended she reach out to someone else in New York. Because those kinds of things are regulated on a state basis. I work straight with a broker, rather than an agent because sometimes the agent is boxed in by the kinds of policies that our company offers. And what might be best for you is actually something that another company offers.
We’ve got a couple graphic designers, we’ve got illustrators who work with clients. Elizabeth is a web and graphic designer. Often your business liability insurance policy, if you get one, will help cover you on when you create something for someone and you don’t copy anyone but someone thinks that you copied their work. So while you did everything perfectly and didn’t necessarily copy anyone, someone down the line thinks of that you did. And your contract with your client is most likely going to have some sort of indemnification provision, saying you’re responsible for it since you designed it. Your business liability insurance often will help provide you with an attorney and help deal with that situation if it ever comes up. So a business liability insurance policy is kind of great on multiple levels, not only protecting your equipment but protecting you if something goes wrong down the line.
So that’s task number two. Reaching out and finding if you either are going to just get a rider to cover the equipment that is in your home or if a business liability insurance policy is the best thing for you.
Task #3: Pick the right legal business type
Task number one was getting your financial house in order. The first half of task one was getting your EIN. The second half was getting your business banking accounts. Task two was getting your insurance policy. And task three is picking the right legal type of business.
There are four different types of business from a legal standpoint.
Before I dive into that. Bonnie, to get that coverage for your business liability insurance sometimes you have to request the endorsement, I think that is the right word. The endorsement for copyright infringement, but I know mine came with that standard. Actually, I don’t know if it came with it standard or my broker negotiated it for me. Which again is another great reason to have a broker is because they have far more knowledge about insurance than you ever will. And can go ahead and make sure you get all those things taken care of.
There are four kinds of business types, legally, that your business might have.
The first is what most of you probably are or were when you started your business. And that is a sole proprietorship. Sole proprietorship means that you just go out and say I’m offering these products or services. There’s no need to tell anyone that you’re going to become a sole proprietorship. It’s just that automatic thing that happens when you go out and say I’m running a business and I’m selling these products or services.
The companion to that is a partnership. And that’s when you do the same exact thing, but you do it with one or more friends. So you collaborate with someone and say we are offering these products or services.
So those two are just automatic and happen automatically as soon as you open your doors. If you’re doing it by yourself, it’s a sole proprietorship. If you’re doing it with one or more friends, it’s a partnership. So those just happen automatically, you don’t have to do anything to become one.
The other two, you do you have to do something to become. You actually have to take proactive action and register to become them.
The first of those is a limited liability company or an LLC. These are created on a state by state basis and you go to your state and say, “I want to become an LLC”. You follow the process required in your state, which in most states takes about seven steps. It will never take more than seven steps, less in certain states. And you become a limited liability company. So it takes action on your part.
The second one that takes action on your part to become, is a corporation. And a corporation is similar to a limited liability company, in the fact that you have to go to your state. But the legal structure is slightly different.
For this task, I have, which I am putting in the comments below, a 13 question checklist that you can go through. And I’m pretty sure that this page also has the recording of an in-depth workshop. In the workshop, I talk you through how to decide if it’s time to become an LLC. For the vast majority of creative businesses, an LLC is going to be a better option than a corporation. Mostly because you’re not getting any investors, you’re going to own it by yourself. And mostly because most creative people don’t like to do legal red-tape and a corporation comes with a ton of required legal red tape in order to keep your corporation status.
So why do people become limited liability companies and corporations? The reason people become LLCs and corporations is because basically what it does is put a fence between your business and your personal life. When you are a sole proprietorship or partnership the law sees no legal distinction between you and your business.
For example, Elizabeth designed a website and she designed a logo for this website as part of the website package. And the logo infringes on someone’s trademark. She didn’t know that it was going to infringe on someone’s trademark, it’s a logo design she had never seen. And so she had no idea that it was going to infringe on this person’s trademark. The client starts to use it they get a cease and desist letter. Claiming that they’re gonna have to pay $50,000 in order to make this all go away.
And they come back to Elisabeth and say, “Hey Elizabeth this is on you. You’re the one who designed it. You are responsible for not only negotiating a settlement with this person but redesigning our logo for free.” If she’s not an LLC and if the amount of assets that her business has isn’t great enough to cover the settlement that she’s able to negotiate with the other side. She has to come up with those funds out of her personal accounts. And if she doesn’t, then they can come after her personal accounts.
Say she negotiates a $100,000 settlement, but she only has $50,000 in a business bank account. So she pays that $50000 and they come and attach a lien on her home. And do other things in order to get the rest of their $50,000.
If you are an LLC, basically there is a fence between your personal life and your business life so they are no longer allowed to go after your personal bank accounts. They are no longer able to go after your home. In some states that are called community property states, which I know Elizabeth is because she’s here in California with me, they are no longer able to go after your spouse’s income and assets. All they can go after is the stuff that is siloed in your business. All they can go after are the things that the LLC owns. Yes, the LLC may have to close its doors because of this. Yes, you may have to start over and start a new business. But they cannot chase you down on your personal accounts.
So an LLC is all about putting that fence up between your personal life and your business life. Which is why I say all the time that knowing that it’s time to become an LLC really has to do with mama bears. And has to do with what in your personal life you would you fight to the death to protect. Just like a mama bear with her cubs.
So like I said there is a link to the worksheet that kind of walks you through the 13 questions. But it also is going to give you a head start you thinking about what your mama bear tendencies are. And even if you don’t hit all of those points. And it doesn’t quite lean towards becoming an LLC if, for peace of mind, you just want to go ahead and make that investment in creating an LLC.
So that is the task number three deciding which business type is right for you. If you are a sole proprietorship or a partnership, deciding if that’s still the best vehicle for you or if it’s time to make the switch. If you’re an LLC or corporation, the answer is probably yes and that’s a really quick answer.
Task #4: Cross off the legal red tape
Task number four is the cross off the legal red tape.
Pretty much every single one of us probably needs at least one permit or license for our businesses. Often a basic business license is required by almost every city and or county for the privilege of doing business within their borders. Even if you don’t have a brick and mortar or people come to you. Even if you just are operating out of your home and doing business over the internet. You are running your business out of your home which is located within the city and or county and they will likely require you to get a business license for that.
And so task number four is finding out if you need that business license by contacting your city and or county depending upon where your business location. And then finding out if you need any other permits or licenses.
For example, it doesn’t look like we have any jewelry makers here today, but often times for my jewelry maker clients they’ve got their torches and other kinds of equipment. And they need the fire department to come in and sign off on their equipment. And look at what they have and record it. So if there’s ever a fire the first responders can be prepared for what they’re getting themselves into. So that they’re not going into a house not knowing that there is a large tank of oxygen that could explode. So that they are more prepared and know how they’re going to fight a fire if one ever happens. So that they can protect, not only your neighbors nearby, but the first responders themselves.
For those of you who work out of your home and clients may come to your home occasionally, sometimes you’ll need what’s called a home occupancy permit. That says even though you are in a residential area, what you are doing is okay. Usually this is only required if clients and customers are coming to your home, not if running a business where you meet with clients electronically or over the internet.
**I’M HERE IN BREAKING IT UP!**
I’m so that’s kind of task number 4 unfortunately because this is regulated on our kind of individual county and city basis it’s really hard to point you to a place that says this is where you go to know exactly what you need to do it depends so much on what your business is and where you’re located so unfortunately I don’t have a like one stop shop resource for you other than saying um based on my own experience and my clients experiences and those in our membership communities experiences sometimes calling city hall is the easiest way to go about it to say not tell them that you already have a business but say I’m thinking of starting a business that does that. If I. That’s what permits and licenses in my getting to need in our city. I’m so yeah so chamber of commerce’s Bonnie’s question was chamber of commerce’s 2 I check with them on and they might know but I’ve found in personal experience that city hall on even though you may get passed around a lot of them can be a better source of information on but I think it probably depends on how strong an active your chamber of commerce is you know it also depends on the size of your location you know like when I lived in San Francisco and when I lived in Oakland on there you know they have tons and tons of small and large businesses within their jurisdiction and so those places just had a page on their website that says if you’re doing this. If you’re running a business in our location here’s here’s what you need here’s what you need to know here’s what permits and licenses some of them will even have quizzes and things that you can take forms that you can fill out that will spit out what permits and licenses you need so it all kind of also depends on the size and the number of businesses in your location. So dean is question is what happens if you’ve been in business without for awhile with no license will she get in trouble when she calls. So. Often. I’m there is like a quote unquote standard fee for running a business with out with out so like I think the city of San Francisco it was like you paid an extra $250 your first year I’m but usually that’s only going to apply if they’ve caught yeah if they haven’t caught you you just go ahead and say that I am you know I’m going to run this business and go ahead and do what you really want to be on the up and up you just say that you started before handing you pay the extra speed of but for the most part they just want to know and they just want your money and they’re not going to assess years of back licensing fees. I have never heard of the city doing that. In the last well I mean even before that in the last 10 years I’ve never heard of the city saying you’re gonna always for the last 5 years business licenses fees because you were a business and you haven’t been paying. India’s question is what’s it normally costs on average it is all over the map on you know like places like a lot of places in California it’s a percentage of your revenue you know so like San Francisco switched over to a format that it’s like a certain percentage of the revenue and what that percentage is completely dairies on based on the kind of business that you’re right. So what it cost how often you have to renew you know it if it’s are you know larger fee up front and then a smaller fee you know here too through whatever it is very soul all across the map that I can’t give you this is the standard and this is what it is. Because again that’s regulated if you need one and what it cost and how they do it varies so much even within a single county on a city by city basis. I’m so and some of that is based on you know how much revenue the city is really getting you know how many businesses there are and how much revenue the city thinks that it can get from those or are they relying more on the brick and mortar store to kind of pay the sales tax to them to kind of generate the revenue so it all kind of depends on how your city has chosen to prioritize revenue from. So unfortunately I don’t have a great answer for that. So that is task number 4 going had and. Putting down the fear of getting in trouble and just saying I’m going to start a business that does this. What kind of permits and licenses what I need.
Task #5: Be the kindest biz owner around
And go ahead and tackling that so our fifth and final task is being kind as business owner around. I’m so. Contracts get an incredibly bad rap on contracts are thought of as these 2030 huge long page document stuffed with legal jargon. And they are just. It just you know a horrible thing cages have to pause to read Bonnie’s comment because once again you guys are making me so happy being like proactive and on top of things funny just went to our city hall website all the info she needed there and she doesn’t need a business license in her location like is that it totally depends somewhat cations you don’t need one some locations again are saying we’re not going to focus on revenue coming from there so yeah I am glad that it was super easy to eliminate that from one of the things that you’re going to have to do in on your list that was our goal today was to help you evaluate which ones you do need to do and which ones you don’t somebody’s able to cross off number 4. I’m so number 5 is all about being the kind as business owner around so what I want you to do is kind of flipped the script on what contracts actually are for so contracts for I am going to be the main person who dictates this is exactly how our business has to operate this is exactly what our relationship what looks like. I’m what contracts are actually all about is contracts are actually about I want a relationship to be successful I don’t want to unintentionally disappoint you because you thought I was going to do this and I thought I was going to do that. You thought I was going to not only deliver you a website and a logo but you thought I was going to handle the copy and some of the marketing copy on the website and I know that I don’t do that and that’s not part of my website packages on because that’s not my area of expertise and I need you to provide me. And not unintentionally disappointing your client because that’s not part of the services that you offer and so a contract really we need to flip the script to the contracts are all about creating strong collaborative relationships from day one that you’re both on the same page about what’s gonna happen when and how it’s going to happen. And so contracts you don’t need to be these humongous long kind of things in order to be about a contract really only needs 3 things to be about you need to say provide an offer I am going to design your website and logo on and going to provide all of the framework and you are going to provide me all of the content including all of the illustrations and photos and text copy that’s going to go on that website and the website that I design you know is going to just be the framework you’re gonna have to go into the back end of word pressed and create all the pages and create all the content and all of those kinds of things and in exchange for me creating those things your going to pay me $1000 in your gonna pay me 50 percent of that up front 20 percent when I send you the wire frames on and you know 20 percent once the website is ready to go. And so that’s the offer that’s what I’m gonna do and then they say yes that sounds great they accept your exact offer what you said and then you exchange the things of value that you talked about those are the only 3 things necessary to create a contract on it if instead they say no we want your help you know we don’t want to go ahead and you know create all the pages in word press we want your help will provide you all the photos and the copy but we want you to know kind of upload all of that into wordpress so that it’s just ready to hit play and we don’t have to handle any of that. So they say we want you to change change and include that as part of the offer. And so you then say well I’m happy to do that for you but it’s gonna cost you you know $850 more or it’s going to cost you $75 per page that you want me to deal with more on so you want me to do 5 pages at $75 a page it’s now going to be that’s right and they say yes that sounds great so now you know there’s functioned as a counter offer you clarified their counter offer so your now offer becomes they sound great to that so that’s when our contractors forms and then you exchange things of value. I’m still a little bit is one of the members of my membership community which is called artists courtyard and over the winter break she went through the course that we have in there of it talking about creating your contract alone so yeah and she. She went ahead and did it and she’s saying that having that clear contract. Yeah not stuff with legal jargon the template I give you is not stopped will hold inch of legalese she said she actually gained more business she used it for a really simple project and they said well look you’re awesome this is super clear and they added a ton of work to the existing project so I might have to like copy and paste that and use that as a little like testimonial they’re Elizabeth I’m going to email you about that later alone because I’m working on revising the sales page. All on asked for testimonial. So yeah so you can easily create a contract and I’m gonna tell you in just a second about the email course of that time will start next week but you can start it at any point in time on but the first batch of people are going to start going through next week on and as part of that I’m going to give you kind of a contract a really simple mad libs template on that you can use to create your very simple first contract that kind of covers the basics uses journalism props to kind of create your very first contract. So that you can start having these kinds of experiences like Elizabeth having with our contract and decide if you need to finesse and fine tune that a little bit more it so task number 5 is being the kindest business owner around by making sure everyone’s on the same page for collaborations for your clients for customers by having a contract now we know we’ve got several people in here who sell digital products and you maybe or you sell off physical product in your saying do I really need a contract. So it all kind of depends upon you know often with the digital products. It’s a terms of service and how you’re allowed to use my digital products actually is governed by a contract so you know there’s a ton of pattern designers out there you know I’m huge knitter there’s a ton of knitting pattern designs out there that you download the pattern and then at the very bottom it says for personal use only unfortunately that’s not a valid contract because again when we talk about our 3 things required for a valid contract I have to know before I download it that this can only be used for personal use only and I have to agree to that and so when it comes to digital products if you have restrictions on how your end user can use it you need a contract in order to hold them to those restrictions and that oftentimes can be done really simply by having a check I agree to the terms and including it in your product description including in your product description this can only be used for personal and home use only. Then I agree to your terms and your terms are going to once again spell out how they’re allowed to use it and then you form that ballot contract they know before they purchased that they can only use it for the specific reasons they agreed to it by checking the box as part of check out and then you’ve provided them the pattern and they are giving you the money for the patterns you exchange things of value on it so that kind of is still applicable to you even if you are a product based business on again if you’ve got those kinds of restrictions on those of you who do wholesale a very similar thing you know maybe you have that you have a minimum for your wholesale orders you know you again you don’t need to have a formal contract for your whole cell providers or about how you ship things for wholesale or this or that eat the other whatever your wholesale rules are again you can have a check box I agree to the whole cell terms on and kind of lay those out make them check the box and then you’ve got a contract it doesn’t need to be always something that is printed out and signed on or electronically signed things like a check mark check box can function as.
So those are 5 tax. So your assignment today is to think about which of these 5 task you need to complete getting our financial house in order by ordering your e. on which I think Dino was the one who already took care of that and opening a business bank accounts which is I’m gonna answer Karen’s question right now I’m so Karen asked doesn’t have to be a quote unquote business banking accounts on hers is separate but she doesn’t pay extra for a business account I’m so I Addis went to become an LLC or corporation the bank account is going to have to be in the business is name and as soon as it becomes in the businesses name most banks are going to force you over to a business banking account there are tons of it banks out there that offer free business checking. Mark by capital one is where all of my accounts are for the artist GDP and is completely free. So there is definitely on the ways that you can start a banking relationship with someone that as a sole proprietor that is going to be able to continue once you become an LLC and get a business banking account. Which sometimes can offer you some great things like you know my business banking account comes with discounts on certain products and services that I already use in my business so it just gets me 20 percent off because I’ve got a business banking account and those kinds of you know they’re going to be much more you know personal related when it comes to a personal account I’m in it is one that you know if I wasn’t an LC I am but if I wasn’t I could continue that relationship by just updating the name and providing them the articles of organization and not have to worry about changing. I’m so there are lots of beings out there I will hurry and pull up. Spark my Capital 1 let’s hurry and open them up not belong in. Not this one. That allow you to do it I created that account he created it like a year ago in like about 15 minutes sitting on my couch so you know depending upon the kind of business you run you might have to provide them certain things you know like I had to provide them the articles of organization because I’m an LLC just upload them a copy of them so you know they’re gonna a business banking account is going to require just a little bit more than your social security number your yeah yeah and. But but it’s not super difficult set up so hopefully that answers your question. I’m so task number one was you’re getting your financial house in order you’re ordering your yeah I and and you’re making sure you have a separate account ideally a business account so that you can continue to use that for as long as you’re without bank. I’m at your going to number 2 on the gate cover your assets. By making sure you’ve got your business equipment and those kinds of things protected either by getting a writer on your existing policies or by going out and getting a business liability insurance policy task number 3 is that you’re going to make sure you’re the right legal business type you’re going to if you’re still proprietor or partnership you’re going to see if it’s time to become an LLC or corporation and I gave you that checklist on that you can download to go ahead and figure that out you’re an LLC or corporation you’ve already made that assessment and you you can you can cross that one off your list on number 4. Is it that you are going to handle the legal red tape by getting any permits and licenses that your business needs and toss them or 5 is you’re gonna be a kind of business owner by making sure that you are on the same page with those are working with about how you can how your relationship is gonna look look.
Take the course
So there’s one more slide of what I wanted to cover. So any questions? I see that we’ve got one from Karen. Throw them in the Ask a Question box and I will start answering them.
For those of you who find that you need to tackle several of these and you want a little bit of help, as I mentioned starting next week you can get an email course to help you tackle these tasks.
Over the course of two weeks, I will send you five email assignments. They spell out exactly what the task is. And provide you, to the best degree possible, as many links and resources to make it super easy to complete it. So it’s going to walk you through completing each of these tasks.
In it, it’s got the Which Business Type is Right workbook, that I mentioned. Along with some other resources on helping you to decide what your Mama Bear tendencies are and if it’s time to make the switch.
The contracts day of the course has a brand new, never seen before template that’s going to allow you to play Mad Libs to create your contracts. So you can have your first contract super fast and easy and really customizable. We’re thinking about it kind of from a journalism angle that I think is really fun and different.
And best of all you’re able to do it for just what it would cost to take me out to coffee and buy me a pastry. For only $7. There is a green button below that says Learn more about the email course that takes you over to the sales page. And has a little more information on it and allows you to go ahead and purchased it so that you can join us.
I’m so that’s what I wanted to cover Karen’s got a question I’m going to answer that if there’s any other questions please throw them down there it and we I will answer as many as you guys have before we wrap up. So Kieran’s is. I’m actually turn this there’s this new function that lets me. Rains Isshin them into questions super awesome I’m so Karen’s question is she has to businesses napa valley art workshop and her art business which is probably her own name should she have to account for them and does she need a fictitious business name for that. So we didn’t cover fictitious business names today. This is business names or doing business as statements which are completely interchangeable depending upon the kind of business that you’re running on. So those those are necessary anytime you’re doing business as something not your legal name so if you’re in a little seat on which happens for a lot of my clients I was just talking about this yesterday with someone we created an LLC for them and they have multiple brands under there LLC umbrella and they have their height and the line of that is underneath their own name and then they have a more accessible jewelry line that’s underneath differently. And so their high end line is exactly the same name as they’re a little scene but there are you know more accessible kind of line there you know more not quite mass market but more that kind of a lower price point money I’m is under a different name and so we’re going to have to file for a DB a for a fictitious business name for that name for that so anytime you’re doing business as not your legal business name so if you you know like when I first started the artist G. D. since it doesn’t include my name in it doesn’t include kidney Staley I had to file for fictitious business name statement with the city of San Francisco to go ahead and get to do business under that name I’m so a fictitious business name statement is just there to say on if something goes wrong and you need to find out who’s legally responsible for this business and allows you allows me as the lawyer to figure out who’s legally responsible for that. So any time you’re not doing business as your legal name. You need a fictitious business name statement and not would go in your bucket number 4 of the legal red tape of things you might need it so the second part to her question was does she need I soon too banking accounts for them and that’s really up to you you know I. Rob I mean I have well I mean I have the RCD is its own LLC so it has to have its own banking account but from day one even before I was in a an LZ I had it all had an old. A bank account separate from the law firm for that business just because again it was a brand new business I wanted to get a handle on kind of what the expenses were what it was what income was coming in from and all of those kinds of things so. I tend to be someone who likes lots of bank accounts especially because I’m I’m good at finding free bank accounts. I’m just because I like to be able to silo money so that I know that this money is for this purpose it because it helps me just for my budgeting standpoint I have much more self control when they’re all silos out as to know that this is money for this thing and this is money for this business and then when it comes time for. You know for filing taxes at the end of the year it makes it so much simpler for my accountant because I can say here’s all the things associated because after files to schedule seats and so here’s all the things associated with this business for this schedule C. and here is all the things associated with this business for the schedule see I’m so I think. Having them separate becomes a personal opinion at a certain point in time if you’re not an LLC if you are not will see they have to be separate but it all kind of depends on how you your relationship with money on how you think about money and you know if you need to file 2 separate schedule seats at the end of the year and if you’re doing it just for ease of you in your account. Process. Hey mom. So mostly answered this part of her question we answered the the 2 accounts we answer the fictitious business name and if you want separate LLC so this question comes up a lot I’ve got to you know with the with the client that I was meeting you know talking with yesterday that we got her new LLC you know the question at the beginning was do I want separate LLC’s for these brands for my high and the line and for mine more accessible kind of jewelry do I need to separate LLC is for those. And then yesterday I had another conversation with someone about you know do they want her and her husband both run business. Should they be in the same LLC. I’m in the question becomes if they’re in the same LLC then they’re legally treated as the same thing so if something goes wrong in your teaching business it will impact the revenue stream with a separate business that is your art business are you okay with those 2 impacting each other are you running on you know what with the husband and wife example the husband is running a business that’s far more risky than the wife’s business and both of those businesses are in no they’re both self employed people and they want are probably going to end up with 2 separate LLC’s because if something goes wrong and his business they don’t want to take down her. They want they want those separate so that if in the so that they stay silo. I’m into the question so the question for you to answer is are you OK with if something goes wrong in your teaching business that it impacts the art business or if something goes wrong the art business are you okay with it impacting the teaching business and as long as you are okay without overlap and used you are okay without risk then it’s completely fine for them to be under the same umbrella as an LLC.
Upcoming In Session workshops
So that’s all the questions that I’m seeing.
I’ve got two more In Session topics planned already over the next 6 weeks. Next week’s topic is going to be a brand new fun workshop all about creating a business plan for your creative business.
And I’m going to be helping you write it on just one sheet. It’s based on the Business Model Canvas. I’ve customized one for creative businesses that gives you lots of room to doodle and make notes. And create a business plan on a single piece of paper without all the formality.
I’ll put the link to it in the chat so that you can join us next week. At same time next week 10:00 AM Pacific and 1:00 PM Eastern.
I hope you will join me on to think about how you can create a really simple and easy and visual business plan. If you want it to be visual with little sketches and drawings and stuff. I am super excited about this workshop. It’s brand new and one of the things that I sketched towards the end of last year when I saw a version of it for law firms. And I thought, Hey I should do this for creative businesses! So this will be completely brand new and I’m really excited about it. Thanks everyone for tuning and I hope to see you next week! I’ll see you then. Thanks so much everybody and bye bye.
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