Top 5 Legal Concerns for Small Creative Businesses
How do I protect my company name? What kind of business structure should I have? Do I really need contracts? So many questions like that have run through my head since I started Sycamore Street Press. It's easy to get overwhelmed and just ignore them. But we all know that's not a good idea, so enter Ben Pollock of the Juniper Law Firm. Yes, he is my younger brother... which means that I am very lucky. Because he is also a whip smart attorney who understands the ins and outs of small creative businesses. He generously agreed to write this post for our blog. He also contributes to the Design*Sponge Biz Ladies series and writes his own blog, if you'd like to read more. - Eva If you’re like a lot of small businesses, hiring a business attorney is not very high on your priority list. In fact, it may not even be on your list at all for any one of a number of reasons. So let’s take a look at the top 5 legal concerns for small creative businesses, and then we’ll decide whether it might be a good idea to make a new lawyer friend.
1) Business Formation – From corporations to limited liability limited partnerships, there are probably more available types of business entities than most people are aware of. When starting your business, it is important to get the entity selection right. And for more than just tax reasons. The entity you choose can effect your available management structures, who can have ownership, your exposure to legal liability, what formal meetings and notices your are required to have regularly, how much it costs to set up, and what records you are required to keep, among other things. Your best bet is to narrow it down to two or three options that fit your needs based on the above non-tax factors, among others. Then, once you’ve narrowed it down, you can pick between those based on tax benefits.
2) Trademarks – Most small businesses, especially creative businesses, understand the importance of having strong branding – from logos to distinctive packaging and everything in-between. It is trademark law that will allow you to protect your branding and prevent others from using branding that is confusingly similar. In addition to your logo, trademark law may protect your packaging and many other aspects of your overall image, including use of colors, as long as they are unique enough to set you apart from your competitors. Protecting your branding will allow you to differentiate yourself from your competitors, thus allowing customers to easily identify you and your products. There are several advantages to registering your trademark, including increased protection of your mark, deterring others from using a mark that is confusingly similar to yours, and the availability of greater remedies if your mark is infringed.
3) Copyrights – Copyright law is what will protect the creative, as opposed to the functional, aspects of your products. Creative businesses succeed by producing unique products that customers cannot find elsewhere. And if this “advantage” were to be taken away, many businesses would likely fail.
In the online context, there are remedies offered through the Digital Millennium Copyright Act that will allow you to request that internet providers and others take down infringing material, even if you haven’t registered your copyright. But it is often difficult to prove your ownership of the material you want taken off the web without having registered your copyright beforehand. And if the copyright infringement does not happen on the internet, or if the internet service provider and others refuse to take action because they are unconvinced of your ownership, your only option is a traditional lawsuit. And you cannot sue without first registering your copyright. The advantages of registering your copyright before it is infringed are increased remedies, including the ability to recover all your court costs and attorney fees. This makes it much easier, and affordable, to protect your copyright than if you were to register it only after it is infringed.
4) Social Media Policies – More and more, social media is becoming an essential part of a small business’s marketing plans. And more and more, employees are not only participating in social media, but are often speaking about their employers or their employer’s customers on social media. A social media policy will allow you to have greater control over how your business is represented, or not represented, by your employees. There are, of course, strict limits on how much you can control your employees’ use of social media, but a little guidance can go a long way in making sure your business is portrayed well online.
5) Contracts – “Oh, we’ve been friends forever.” “This isn’t the first time we’ve done business together.” “We trust each other.” These are all common excuses for small business owners not to have a contract in the context of a business relationship. But what they don’t understand is that having a contract is NOT the equivalent of saying, “I know we’re friends, but I don’t trust you.” What it is actually saying is, “We are friends, and I want to protect our friendship from any unforeseen circumstance in the future.” When two people or businesses sit down and come to an agreement in the very beginning about how to handle a difficult situation in the future, it ensures that everyone feels they are treated fairly if such a situation arises. If an agreement is not put in writing beforehand, and a difficult situation arises, emotions will run high, people won’t be able to come to an agreement about how to handle it, and no one will feel like they’ve been treated fairly when it is all over.
I hope this small outline of common legal concerns for small creative businesses has shown you the importance of these few legal issues. I suggest you find a friendly attorney who has experience in these areas and form a close relationship so that you have somewhere to turn for guidance. And if you are not sure how to find an attorney, check out this post on my blog for some tips. - Ben
Disclaimer: This article is not intended as, and should not be understood to be legal advice. The topics above were covered in a general and informative fashion, but they are not tailored to your, or anyone else’s particular circumstances. If you would like to discuss these topics as they apply to your business, please feel free to contact me via my website, or any other attorney who practices in these areas.