The Top 5 Legal Tips Entrepreneurs Need To Succeed

Hello everyone! I’m excited to post my first article of 2014, and launch my newly branded site.

Over the past year I focused primarily on Reality TV, but I wanted to expand to cover more areas of the Entertainment Industry since I also receive many questions about the music business, indie films, branding, and entrepreneurship. If you want to find out more about what we will be blogging about you can go here.

So on to today’s post! Today’s post is for all entrepreneurs because pretty much anyone in Entertainment who doesn’t work in-house at a studio, network, or label is a true entrepreneur.

I have put together the Top 5 Legal Tips Entrepreneurs Need To Succeed so that you can start the year off right.

 

I hope you found this information helpful, please subscribe to my newsletter and leave me a comment to let me know.

If you would like more details please see the following written post below.

All the best, Richard.

The Top 5 Legal Tips Entrepreneurs Need To Succeed

I have worked with hundreds of entrepreneurs over the years and many of the same issues pop up over and over again. The tough part is that if they had known what to look for at the very beginning when starting their company or project they could have avoided many of these issues.

In this blog post and video I am going to give you my top five legal steps that I think every entrepreneur should take while in the start up phase of the business. If you follow these 5 steps you will probably avoid many major pitfalls that I have seen over the years…and likely save a lot on legal and accounting fees.

 

All right, so here is the list. Let do this backwards like a countdown since it is the New Year, Number 5.

 

5.  Always Use Written Contracts (Avoid Oral Contracts)

 You are running a business, so don’t depend on an oral contract to protect your interests.  I know people say, “aww but an oral contract is enforceable”.  Yes, it is, but try to prove an oral contract in court! Trust me when I tell you that it’s very hard.

So, I don’t care if it is an email or pieces of paper, you need to get everything down in writing so you have a “meeting of the minds” documented and can’t be sabotaged by someone’s selective memory.

Think about it from the standpoint of what position you want to be in if there is ever a dispute. If it comes to that, it means you have a disagreement and probably two different sets of facts. If it is just your word against another person’s word, then there is a lot left up to chance. On the other hand, if there is a written contract that states what you two agreed on, it will be much easier for a third party to see where each of you are coming from.

Again, even if it is just an email between parties detailing what you both agreed to, that is better than nothing!

 

4.  Properly Categorize Workers (Independent Contractors Vs. Employees)

 Properly categorize your workers.  I know everybody wants to make everybody an independent contractor so they don’t have to pay taxes, but in reality if you have a contractor acting as an employee…then they are an EMPLOYEE. The law will come down on you hard if you miscategorize a worker, so it just makes sense to do it the right way from the start and avoid any problems.

I have seen a number of companies go out of business because they had miscategorized workers. The workers became disgruntled (with the help of an opportunistic attorney) and they won a Labor Board hearing, which classified the workers as employees and awarded missed meal time and overtime pay. If you have not been paying your workers properly, you will possibly also have to pay penalties, plus you are going to have to pay legal fees to defend against the law suit that you are probably going to lose.

Remember to keep this in mind with regards to interns as well. As Fox Search Light Pictures found out last year in an intern lawsuit that they lost in 2013, you have to be extremely careful about how you are using your interns. It is just not worth it to save a few bucks for the total devastation to your business that could possibly come later.

A very simple but inexpensive way you can help protect yourself from an employee lawsuit is by getting some really well written and comprehensive employee handbooks. If you have employee handbooks it does not necessarily mean an employee cannot bring a complaint against you but it is far less likely.

3.  Register Domain Names For Your Business (Names that Identify Your Business Brand)

 Register a few domain names that contain the name of your brand that you are trying to build.  There is nothing worse than building a brand and finding out that a cyber squatter has bought your name and plans to extort you for a large amount of money before he or she will turn it over.  Be proactive. Register and maintain those domain names early.

Most experts will advise entrepreneurs to not get ahead of themselves and spend to much money early on, but it becomes a cost/benefit analysis. Domain names are relatively inexpensive. You can register most available domain names for as low as $9.99 at places like GoDaddy.com

 

2.  Register Your Trademark

 A trademark is the legal basis of any brand, it basically is the logo or the name associated with the product or service you are offering. Registering your trademark protects you from having no recourse if someone uses a similar mark for the same product or service without your permission. Initially, protecting your brand may not be a big concern, but the point of all your work is to one day be successful and build a brand. When that happens then there will be people coming out of the woodwork trying to associate themselves with your brand.

For example, if you are a recording artist and are selling music, then your name would be in a certain class (likely Class 9 or 41) and you would register your trademark in that class. You don’t want to continuously do all that work to build your brand and have another artist come along and use a name that is similar to yours. You can’t stop people from doing bad things like this, but you can prepare your response if it does happen.

Also, note that there is a way that you can reserve your trademark while you are building your brand. That is a pretty smart way to start because initially you may not have the evidence needed to secure a trademark registration.

 

1.  Create an Entity

Drum roll please….The number one legal step I think you should consider when setting up a new business is to create an entity. That means forming a limited liability company (LLC) or incorporating (forming a corporation) for your business.

The main reason for this is that you want to keep things separate – ALWAYS keep your personal assets separate from your business assets!

Imagine someone sues you for a business matter and they end up winning a judgment against your business and you personally. They would be able to collect from your personal assets, like your bank accounts, home, car, etc. It’s one thing to lose business assets in a lawsuit, but its much more devastating if you lose personal assets. That could affect your personal and family life. You don’t want a judgment holder from a business lawsuit to be able to collect from your personal assets, and vice versa.

There are other valid reasons, like fundraising, worker issues, and tax benefits, but essentially the main reason why you setup an entity is to separate your personal and business lives.

So there you have it! If you would like a convenient PDF of my Top 5 Legal Tips For Entrepreneurs you can download that here.