Three Essential Legal Resources Every Small Business Needs to Succeed
Congratulations! You've set up your business and started operating! Now it’s time to protect yourself, your family, and your hard-earned assets.
Are you concerned that you don't have all the necessary pieces in place? Ensure that you have everything you need to avoid potential pitfalls. Small businesses should invest, even minimally, in specific legal resources to start on the right foot and prevent mistakes that could haunt you over time.
At HTBiz Law, we believe there are three essential things that all small businesses need to have ready to go at the drop of a hat:
1. Establishing an LLC (Limited Liability Company)
Establishing an LLC is a crucial defense when launching your business. Operating under your own name leaves your personal assets—like your home and car—vulnerable to seizure. An LLC creates a robust barrier between your personal and business assets, shielding your personal life from legal threats. Without this protection, your private assets could be at risk, potentially seized to settle business debts or legal judgments. It’s not just a formality; it’s a fortress safeguarding your financial and personal security.
Setting Up Your LLC
You can set up your LLC online in the state where you reside and operate your business. However, there are additional steps to ensure your LLC is recognized as a legitimate business and that you maximize its protections. Besides having separate business financial accounts, you should also have an LLC Operating Agreement.
The Importance of an LLC Operating Agreement
An LLC Operating Agreement outlines the critical terms and rules for your business, such as:
Identifying the members of the LLC
Procedures for adding new members
Defining your maximum liability to the business
Indemnification clauses protecting you when acting on behalf of the business
Succession planning for the future of your business
This is essential for defining how your business will operate and for ensuring that you are protected as you conduct business.
2. Client Agreements
For service-oriented businesses, having a client agreement is vital. Without clients, you won't get paid. A well-drafted client agreement will:
Outline the services you are providing
Define the client's rights and your compensation
Ensure you retain necessary rights to operate your business and serve other clients
Protect you from endless revisions and misunderstandings
Customizing Client Agreements
It's crucial not to rely on generic templates. Each business has unique needs, and a client agreement should reflect those specific requirements. A customized client agreement ensures both parties understand their obligations and protects you from potential legal issues.
3. Non-Disclosure Agreements (NDAs) and Copyright Practices
Protecting your intellectual property (IP) and confidential information is paramount. A non-disclosure agreement (NDA) can take various forms, including mutual NDAs for shared information or one-way NDAs for situations where only you are disclosing information.
When to Use NDAs
Mutual NDA: When both parties share confidential information, such as potential collaborators.
One-Way NDA: When only you provide confidential information, like during a client pitch meeting.
Additional Protections
In addition to NDAs, use confidentiality and copyright notices on any presented materials. This practice ensures that your intellectual property is protected, and your confidential information remains secure. Every page. Every time.
The Role of Legal Counsel
Contracts need to be tailored to your specific business. Generic templates often fail to address unique business needs and can leave you unprotected. A lawyer can ensure your agreements are in your favor, protect your rights, and help you avoid costly mistakes.
Legal Support for You
At HTBiz Law, we offer various options to fit your budget and needs:
Legal Strategy Sessions: Hire us for a 30-minute or one-hour session to address a specific issue or question. Please note, these sessions are not long enough to develop contracts, only to help answer specific and targeted questions.
Done-With-You Templates: High-quality customizable contract templates, coupled with walk-through videos, ensuring you can legally protect your business in a cost-efficent manner.
Custom Done-For-Your Contracts: Agreements drafted specifically to fit your business needs, including both reusable templates (such as client agreements where you only need to adjust your description of services and fees) and one-time contracts (such as for high-value vendors or collaborations). We also can negotiate with third parties on your behalf.
Starting a business is an exciting journey, but it can also be daunting. Investing in the right legal resources from the beginning can prevent headaches and costly mistakes. By having the essential legal documents in place, you can operate confidently, knowing your business is protected.
Stay safe out there!
