No, of course you don’t want to think about legal issues surrounding your business, but then again, it sure is cheaper than having your lawyer think about them. If you don’t think about them now it is highly likely that you will have to think about them later.
Having practiced law for a decade, one thing that was clear was that my clients who were at least somewhat conversant in business law were almost always in better shape than those who weren’t. In my last article here in the community, I shared some of the essential legal issues that you should understand as a small business owner. Today I would like to dive deeper into a few more.
Intellectual property (IP): For many small business owners, especially in today’s Internet economy, their IP may be their most important asset. IP can be one of five different things:
1. Copyrights: A copyright protects the original expression of a creative idea. For example, this article is protected by copyright law. Copyrights protect your blogs, e-newsletters, photographs, art, brochure copy, and so on.
Something great about copyright law is that an original work is considered copyrighted once it is created. When I finished this article, it was legally protected. There is nothing you need to do to create a copyright, but registering your copyright at the United States Copyright Office does offer additional legal protections.
2. Trademarks: A trademark is a word, phrase, design, or symbol that identifies and distinguishes a business. It would, for instance, protect the name of your business or your logo. As opposed to copyrights, trademarks must be registered at the United States Patent and Trademark Office (USPTO.)
3. Patents: If you invent a wholly new process, machine, or product, you can apply for a patent at the USPTO. Note: Whereas obtaining a trademark is usually fairly simple and usually can be done without the aid of an attorney, patents are far more complicated and require legal assistance.
4. Trade secrets: A trade secret is information that has independent economic value by virtue of remaining secret; your customer list would be an example, or the way you make that delicious cheesecake in your bakery might be another. To be legally protected, you have to be able to prove that it really is a secret and that you work to keep it that way.
5. Goodwill: Goodwill is the good name and reputation of your business. If you ever sell your business, your goodwill has independent economic value.
Employment law: Needless to say, legal issues relating to employees can and do take up a whole book. That said, there are a few employment law basics that you should know:
Most employees are considered at-will: This means that they can be fired at the will of the employer for almost any or no reason. Note, however, I said “almost.” That is because the rule is:
Do not discriminate: Legally, there are protected groups, and you cannot discriminate against them in your employment practices. Examples of federally protected classes include race, color, sex, religion, national origin, age, and disability. Also note that state and local laws often give additional protections to employees, so it would behoove you to always speak with your own lawyer in this regard.
Do not mislabel your staff: Is the person working for you an employee or an independent contractor (IC)? Many companies get into trouble because in order to save money, they label their help the latter when really they are the former. To be considered an IC, workers truly must be independent. They must be able to set their own hours, where and when they work, should use their own tools, have other clients, and so on.
Litigation: One of the main takeaways from my law practice was that lawsuits are poor ways to settle disputes. They are expensive, time-consuming, cumbersome, and emotionally draining. Yes, of course there are times when you need to sue, but often, settling will be the better course of action.
And of course, let’s agree that it is always a good idea to get a good lawyer. But at least now you will know the right questions to ask.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.
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