Anytime you enter into a business relationship (e.g. hiring web designers, hiring employees/interns, selling products or services to customers, working with another company, hosting an event or giveaway etc.) you need a contract. A clearly drafted contract will serve as the instruction book for your business relationship, and can capture even the smallest details that need to be included.
Without the proper contracts in place, you are leaving your business (and yourself) wide open for potential hassles that a carefully drafted contract could eliminate or at least prevent.
A carefully drafted contract will do 3 important things:
(1) help ensure both parties are comfortable with their duties and obligations;
(2) make clear the intentions, requirements, costs and expectations each party has of the other party; and
(3) include a remedy within the contract in the event there is a breach such as non-payment (what I like to call “when the shit hits the fan”) which could save time and money down the road by having this addressed upfront.
What should be in my business contracts?
You don’t need to speak legalese to create a valid business contract. In fact, the contrary often holds true, as the best business contracts are written in everyday language and understood by all. There are a few basic fundamentals that every business contract should include such as:
- The date of the contract;
- The names of all parties or entities involved;
- Payment amounts and due dates;
- Contract expiration dates;
- An escape plan/termination clauses to include information about what to do if either party needs to break the contract; and
- Potential damages for breach of contract, missed deadlines or incomplete services
I’m just starting out and not sure what contracts I need to have.
You may be wondering which contracts you need in your business to get going on the right track. It really depends on the nature of the work you are doing in your business, but there are 3 in particular you should have on deck and ready to go.
No.1: Independent Contractor Agreement – If you are thinking about hiring help in your business, an Independent Contractor Agreement is a must-have. This agreement allows for peace of mind between the primary and secondary individuals in a business contractual relationship such an assistant, graphic designer, or consultant you plan to work with.
No.2: Non-Disclosure Agreement – A Non-Disclosure Agreement (also known as a Confidentiality Agreement) enforces the confidential relationship between two parties that wish to share information, knowledge or information with one another for particular purposes. This will ensure that important information about your business will be protected before you share it with third parties.
No.3: Intern Agreement – If you are a business owner who regularly hires interns to work in your business, you need to have an Intern Agreement in place. There are rules about what qualifies for a legal unpaid internship program so you want to ensure you understand the requirements + clearly document the terms of the internship program in a contract.
These are just a few of the common agreements I work with clients on, especially those that are just starting out. In short, business contracts are unavoidable and are truly a must-have in your business. Working with a business lawyer is a practical next step to ensure that you have the right contracts in place and that your interests will be protected.
Let’s face it. Trying to determine which legal task to work on when it comes to laying a solid legal foundation for your business can get a little overwhelming. However, you definitely should not let that keep you from taking action to protect the empire you are building. As an entrepreneur that just so happens to be a lawyer, everything I do comes down to an analysis of 3 things: (1) my business vision and goals, (2) the activities that need to happen in my business to make it run smoothly, and (3) the risk involved in engaging in these activities. Some of the top items I recommend my clients focus on when laying a legal foundation for their business ventures include:
- Forming an LLC or Corporation
- Drafting Website Legal Terms
- Drafting Contracts when working with others
- Filing for a Fictitious Name/DBA
- Filing for a Trademark
Depending on your level of comfort, some of these things you can handle on your own, while many are best handled by an expert. I personally am an advocate of building a tribe of business resources and partners I can collaborate with to get help in the areas of my business where I am not an expert. It has saved me time and tons of headaches.
Now sure that’s easier said than done but the next challenge that comes with getting expert help is usually – you guessed it – money. So….
How do you know what is the most important legal task you need to do right now if you’re on a budget?
Most of the time it is clear to you that some action needs to be taken, but it’s not always clear exactly what is most important task to tackle especially when building a business on budget.
I can frame this a little better for you with a few examples:
Example 2: Perhaps you are a freelancer and your vision is to provide your services to and work with multiple organizations. In this case, it would be critical to have a freelancer contract in place. Website legal terms may be lower on your priority list if you don’t have a website just yet.
Example 3: You may even be a lifestyle blogger or influencer and part of your vision is to secure brand sponsorships. In this case, it would be really important to ensure you have a sponsor agreement that you can use and properly drafted website terms and disclaimers. You could likely hold off on something like filing a trademark.
In short, your business’ legal needs will depend on and be relative to the type of activities you are engaging in and the risk involved. Understanding the order things should be handled will help you prioritize your legal budget and set aside money to address those tasks each month. It is important to understand that protecting your business is an ongoing process that you will do for the life of your business. If you’re not sure where you should start, consider consulting with a lawyer who can better evaluate your business, goals and risk to help set you on the right path.
I had the most amazing weekend attending Power Day 2017 hosted by Christina Brown of Love Brown Sugar & Brown Girls Love. Let me just tell you. Christina is the ultimate boss. She is all things passionate, caring, women’s empowerment and her and her team can put on a damn good event.
The day was filled with panelists who are all bosses in their own right. We got to hear from Tonya Rapley (My Fab Finance), Nicole Sanchez (eCredit Hero) and Melissa Butler (The Lip Bar) to get the inside scoop on how to raise, save and budget the money you need to fund your dreams. Ty Alexander, Africa Miranda and Jessica Andrews chatted all things being an influencer and using your social popularity to pave the path for your own success and advance social good. Yoli Ouiya spoke on the importance of self-care for your mind, body and soul before business. The day ended with hearing from Tiffini Gatlin (Latched + Hooked), Mel Burgos (Rock Yo Rizos), Denequa Williams (LIT Brooklyn) and DJ Olivia Dope on pressing the reset button and how it changed their lives for the better. From failed business partnerships, pushing past haters and tragedy, to shedding of your old self, these ladies exemplified what it means to reset and start fresh in order to walk in their purpose.
There were also several up and coming brands on display founded by some very inspirational ladypreneurs. Some of the amazing vendors showcasing in marketplace at the event were LIT Brooklyn, a Brooklyn-based 100% soy wax candle company by Denequa Williams and lifestyle collection Beauty by Africa Miranda. There was even a hair styling bar hosted by Motions and a super cool 360˚ photobooth to capture all the fun.
My cup was so full after such an awesome day surrounded by so much magic and positivity to start 2017 off in high gear. I am super excited about Power Day 2018. If you missed out on this year’s Power Day, save the date for January 6, 2018 because it is coming back next year!
Photo Credit: @MyFabFinance
Your business may already be in full swing and making money or perhaps in the New Year you plan to launch a business that starts rolling in the dough. Either way you have it, in the back of your head you have that dreaded feeling that something could happen to completely wreak havoc on your dream to be your own boss. You don’t want to lose it. You’ve been working too damn hard to build your empire.
Luckily there are some tricks of the trade and simple ways you can create layers of liability protection to ensure your business is safeguarded. Each of the tools below will offer you some type of protection, but they work best in layers.
#1 – Form a Business Entity
The foundational and core layer is the business entity you select, such as an LLC or Corporation. Forming a business entity essentially separates business from personal assets. For example, if you got into a legal snafu and someone sued you for something that happened in your business, your liability exposure would be limited to the assets in your business. Things such as your home or your car (which are personal assets), would be off limits.
#2 – Get Liability Insurance
The next layer would be having a general business liability insurance policy. They are relatively inexpensive to obtain and customizable to include different types of coverage for different amounts. The scope of coverage will vary, but generally you can expect a policy to cover things such as bodily injury, negligence, personal & advertising injury or property damage that occurs and any defects in the products or services you have supplied. And if you work from home, it’s very likely that your home/renter’s insurance policy does not cover any business items in your home, so you definitely want to check to be sure.
#3 – Create and Use Contracts
Trust me, handshake agreements are not good for business. This layer is sometimes one of the most overlooked for the sake of being in a rush to get things done or FOMO (fear of missing out) on an opportunity, but seriously is one of the most important layers. Having proper lawyer-drafted contracts implemented in your business is a must-do. Period. No exceptions. This will help you make sure your clients or customers understand your policies, how issues and payments will be handled, and also cover you in court if and when you may need proof of what was agreed to. Contracts are truly a no-brainer and you should have them for every relationship in your business.
The Bottom Line
Unfortunately, many entrepreneurs won’t think about these tools and tricks to protect their businesses until it’s too late and the sh*t has already hit the fan. You don’t want to lose everything you have been working hard for. So be sure to consider and include these layers of protection on your list of top priorities if you are launching a business or even if you are already running a business – your business may still be able use a legal check-up to ensure your empire will be protected long term.