How To Avoid 3 Common Legal Mistakes Small Business Owners Make
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How To Avoid 3 Common Legal Mistakes Small Business Owners Make



hey it's marie forleo and you are watching marietv the place to be to create a business and life you love and this is kinda like Q&A Tuesday I'll tell you what's going on there's a topic that hardly anybody talks about and it is so important in fact it's so important that if you don't get it handled it's the kind of thing that can take you and your business out what I'm talking about is how to protect yourself legally especially if you're an artist creator or entrepreneur now y'all know I am NOT a lawyer and nor do I play one on marietv however I have brought an amazing attorney in today who's gonna help me out and this woman is incredible she's one of our B school grads she is so smart and she's someone that I turned to when I need legal advice and counsel Joni Williams story began 15 years ago as a background vocalist for independent artists and it took a fortuitous turn when she was not credited or compensated for her work as a result she's committed her life to educating and protecting artists and entrepreneurs through her work as a lawyer and business advisor through her companies J a Williams law the artists empowerment firm and artists empowerment group her clients include Grammy nominated musicians award-winning coaches talk-show hosts international speakers and best-selling authors Joan a thank you so much for being here thank you so much Marie it's so great to be here well I'll tell you I have wanted to cover this topic for a long time because we get a lot of questions about it and I know it's a very big subject area and of course we could sit here for days but we're going to do that we're going to keep it focused today about three main areas really the most important areas that we need to get handled legally if we want to move ahead and really have a strong legal foundation so the first is choosing the right business structure what do we need to know Joan a about choosing the right business structure how do we make that decision well first of all Marie I'll just tell you there are lots of misconceptions about this most people think that you should just jump and just register whatever but the bottom line is is that the most important thing that you need to know about having a business structure is that it protects your personal assets from the debts and liabilities of your company so it's basically putting a shield around you personally and allowing your company to contract with your clients or provide services and things like that so you really want to make sure that you pick the right one for you and you don't want to just jump to an LLC and that's what most people do they think all business structure perfect I'll just go register an LLC but that might not be the best option for you because it depends on your tax situation you may have kids you may have other assets your company might want to grow to a different level so you really should just talk to an accountant and a lawyer to decide which one is best for you I love that and you know just coming back to my own story when I first started I was terrified to even talk to a lawyer because I felt like oh I can't afford that so that's actually what I did was talk to my accountant that was the best thing that I did because exactly as you said we went through my specific tax situation and he also asked me about you know where do I see the company going and that's how we made that decision so I love that so for people watching it doesn't have to cost that much money right I know that that's money is always the big thing that was my big thing oh I can't afford it so when it comes to choosing your business structure if you can't necessarily afford to go to a lawyer right now an account is a good choice I think that that's um that is a really great option if you decide that you that you can't afford to have a lawyer work with you then yes talk to an accountant if you're strapped for cash and the most important entities that you that give you the legal shield are the C Corp the S Corp and the LLC so you want to speak to your accountant and find out specifically which one would actually work for you based on your tax situation but I want to talk about a little bit about the misconception about it being a lawyer being a lot of money yeah absolutely because I know that's what holds so many of us back from even thinking that we can get all this stuff handled is I can't afford it what do you have to say to people if that's their excuse well as you know in our industry it's often that people want to pay too for solving a problem versus prevention yeah right and I mean in that and that's all of us we we all we all when we when the stuff hits the fan then that's why we're ready I mean it happens like you know I didn't want my dog to go pay for him to prevent him to get fleas but once he got fleas you know I spent hundreds of dollars to get rid of them and now of course I want to prevent them from ever happening again so same thing yes absolutely and so I like to liken it to if you have a car for example you want to pay for regular oil changes tire rotations and things like that so that your engine doesn't break down so that's going to cost you a lot more money than if you were to just pay for prevention preventative care or if you um if you go to the doctor for example instead of going when you're getting sick just going regularly and getting your checkups and making sure that you know your your health is okay it's the same thing with having a lawyer for your business because your business is its own entity so it needs to be taken care of right so it needs to have that legal health so you want to make sure that you have a lawyer on your team kind of like a doctor for your business yeah no I mean it's great and that analogy because think about it and I know this you know as the business gets bigger if you don't have the right legal foundation in place something happening legally can be fatal yes for your business absolutely totally take you out and I've actually actually had a client come to me a long time ago and she this was the situation that happened with her she didn't get the right at um advising about her business structure and she ended up paying 50% of what she made that year in taxes and it did shut down her business so it was heartbreaking for me but luckily we were able to take care of it but you don't want to have something like that happening just because you weren't able to talk to a lawyer or an accountant about the right business structure for you so it's just it's something that's really important to your business to make sure you get that handled yeah so what do we need to know about protecting our goods and services the thing that you need to know the most about this area is if you don't have something written down you're creating a bunch of verbal agreements with people that have no terms so it's really important that you have a service agreement and the service agreement is going to outline what you're providing the person what they're obligated to pay you want to make sure you have your return policy clearly outlined yeah and for people who are in high-risk type of type of professions they want to you want to make sure that you have some type of disclaimer because it's just as important to know what you're going to be responsible for and what you do as a service provider and what you don't do so for example if you're a health coach you want to make sure that you have some type of agreement or some type of disclaimer in there that says hey I'm not a therapist I don't prescribe medication XYZ so these are the kind of things that you want but it's really important that you talk to a lawyer about this part of it because then they'll be able to look at what are the areas that you are that you are providing services in yeah and how they can prevent against the ones that you aren't so it's really important to make sure that you talk to an attorney about that sort of part of it so do you have any idea like a ballpark figure of what someone could expect to pay to get like a service agreement and these kind of disclaimers in place I think it really just depends on the lawyer because some lawyers they charge on an aisle or hourly rate and some of them charge on a flat fee but what you want to do is interview the ones that you're thinking about hiring and then ask them what their fees are and what's associated with it and then you can make your decision from there I love that and you know I love this idea of interviewing several lawyers because I've worked with many in my career and I wish I would have done more of that because you can really get a good sense of how people interact and all that stuff so the perfect answer it's a relationship so you want to make sure that if this person is going to be the general counsel in your business and they're going to help you with developing your business and understanding what you need as you grow you want to make sure you have the right person doing that so it's important to interview okay so our final area today is about business relationships and I think this is the one that you are the most passionate about so what do we need to do to handle ourselves legally with our team or anyone that we're doing business with well murid this is one of the areas that absolutely love talking about because so often it is missed in our industries especially when you're an online entrepreneur you are hiring bas you're hiring different team members and it's so important to make sure that all of your business and that your personal information is protected yes so you're you're exposing them to passwords client records eat all kinds of credit cards yes so it's really important that you have some type of agreement in place that makes sure that they are not going to take that information and distribute it outside of your companies so you need to have some type of independent contractors agreement yes and you need to make sure that it has a non-disclosure in it and that means that you come into my business and you can't take anything outside of my business when you leave yeah thanks sweet heavens you know I remember a little while ago when I first started getting all of my NDA's in place you know I breathed a sigh of relief because I felt terrified you know there's a lot of sensitive information a lot of like new projects and ideas and book things and you know I know maybe not is the best thing in the world that you know some of us I'm like oh god what if that gets out right um but it made me feel so much better and always makes me feel so much better it's so true and also when you're an online entrepreneur most of us don't have the privilege of seeing our teams or ringing them or flying them in yes so you really need to make sure that you have the right people in place and how you ensure that take a preventative measure so to speak yeah is to make sure that you have something that they're signing that make sure that they understand what it is that they're going to be providing you for services yeah how you're going to terminate the contract is in the event that they don't work out right and all of these various different things like protecting your IP for example so it's really important to have that and the other thing if you're in the United States if you're planning on paying someone over six hundred dollars in a given year you want to make sure that you get their w-9 form as well because you're going to have to issue them what they call a 1099 form at the end of the year so you can write that income off that you paid them right and it's really important that you do that because you want as much money as you can get in your business yeah I want to keep them your plates Uncle Sam yeah so we want to keep it all tight and right and aboveboard and obviously I'm Debbie Nuys that's appropriate for a contract based worker right absolutely absolutely and um also what I always tell people to do is get the stuff right up like as soon as somebody comes to you yeah and they want to work with you and you and you're like great this is going to be very relationship I want to work with you first thing you do is send them the independent contractors agreement and then send them a w-9 to fill out because if you the relationship doesn't work out and you decide that you don't want to hire the order you don't want to use them anymore and you want to fire them it's gonna be really hard for you to get that form afterwards so that's like a pro tip yes that's a total pro tip I love it get it up front get it up front Joan a thank you so much for being here today this was fantastic thank you so much Marie it was so much fun so if you want to learn more everything is right down below so Joni and I have a challenge for you today if you don't have all your legal ducks in the row what's one step you can take right now to start making that happen tell us about it in the comments underneath the video did you like this one if so subscribe and share it with your friends and if you want even more great resources to create a business and life that you love plus some personal insights from me that i only talk about in email get those sweet buns over to marieforleo.com and sign up for email updates stay on your game and keep going for your dreams because the world needs that special gift that only you have thank you so much for watching and i'll catch you next time on marietv you notice I have to tell you it's so funny when I find this lease and it said uh no rap sessions and I was like I can't find this lease because I like to rap and there's like no nudity I'm like I don't can't promise that either yeah what you won't you won't lose that mama Mombasa my name is Mary don't forget it

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34 thoughts on “How To Avoid 3 Common Legal Mistakes Small Business Owners Make

  1. Helping my daughter who’s a Awesome cook, to start her own catering service.. Looking for all I need to do to protect her in pursuing her dream and independence.. Contract first and foremost, even though family & friends will be involved.

  2. Chef Habari here! 👋 Is there a lawyer with integrity watching who would like to help me structure and grow my food products? I have healthy meals ready-to-eat!

  3. This is a very helpful guide to the basic issues that everyone needs to keep in mind. Thanks for posting this (Yeah, I know I am several years late.)

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  5. I absolutely agree. I stress this more than anything. I tell people that LAW exists in everything; crimes, partnerships, and even the ground your standing own. One bad day can break you down…

  6. I like the disclaimer on this video, actually the written disclaimer above. That says it all. Every business, every legal issue is different. The details, just one little detail alters every legal issue. Who would like to get legal advice and not worry about hourly charges?

  7. soooo cool im going to do all my legal an documented work while my logo an brand is building b4 i sell anything.

  8. I really liked Ms Williams statement that most people end up paying to solve a problem instead of prevention and a legal shield will be built around your business by incorporating. Step that can be taken right now? Get a legal plan that offers a monthly price for legal services instead of being charged an hourly rate. Preventive law is affordable with a small business legal plan. We have an incorporation package for C, S or LLC to launch a small business. This is what our company does nationwide and in Canada. You can message me and I will email you some info.

  9. Your videos are really good and fill with great content. I'm already familiar in this area but for new business owners or employees wanting to become their own boss, this is definitely for them.

  10. I love your video about passion and how to live a life doing what you love. It inspired me to make the Youtube channel I have now AND I also showed your page to a dear friend of mine who is actually opening up her own pharmacy. This video above really helped guide her. I guess she had some doubts regarding business decisions and this video really helped her out! Thanks for all you do!

  11. I hope this video goes out to people who are planning on starting their own companies. Talking to a CPA beforehand definitely helps to ensure that you are not committing any legal mistakes. 

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