Every Friday I host (and record) a live Blab with someone I’ve met that has helped me along my freelancing journey. For those of you who can’t catch it live, want a review or just prefer reading a blog post to watching a video, here’s a recap of last Friday’s chat.
I met Karen Taggart, an independent attorney and webpreneur, at a LeadPages conference a couple of months ago. We hit it off and have been in contact the last couple months working on some projects together.
Karen has been an attorney for 20 years, as well as owning multiple businesses. She has been working specifically with online business for the past year and a half.
Setting Up a Business Entity
Karen gave us some great things to think about when it comes to starting a virtual assistant business and how to proceed legally. One of the most common questions I get from new freelancers is if and when they should start a business entity.
Here are some things to consider whether the timing is right for you to set up a business entity for your business.
- Why do you want to set up a business entity? If you are just starting out, are you sure you want to make the investment to get registered with your state? Fees vary depending on your state, so if your state has high fees you may want to wait until you are sure you are going to be doing business for a while.
- What type of business are you involved with? If you are doing any business in an area where you are giving advice, such as health or wellness, registering sooner may be a better idea in case the possibility of being sued might arise.
- Do you need peace of mind? If you are worried about getting sued and want to protect your assets, go ahead and do it. It’s a decision you make when you feel it is right for your business.
Forming a business entity is a simple task when you are small and starting out. It is usually a one-page form you file with your state. Fees vary depending on the state you live in, so check out your state’s’ government website to find more information about how to file.
Forming an LLC or corporation will not cover you completely from being sued. It is important for you to keep separate bank accounts and records for your business. Failing to do so is called “piercing the corporate veil” and could leave you being responsible and your assets vulnerable.
Setting up a business checking account is something you should do from the very start of your business. I didn’t create my business identity until I was a year into my business, so it’s not something your have to do right away, but separate accounts is.
You can set up a business checking account in your name to just use for business purposes. When you do set up a business entity you can set up a new account with your business name.
Why You Need to Be Using a Contract
While contracts may seem like a heavy topic, it is something you should keep in mind as you begin your freelance business. A contract with a client is not some long document that no one will understand; it is simply an agreement between two parties.
A contract doesn’t necessarily need to be formal. Emails back and forth stating the terms that are agreed upon by both parties can hold up in court because it is written communication. The point of the contract is to protect you and your client. It spells out what the details of your relationship are, and keeps misunderstandings from arising.
My Experience with Using Contracts
When I start with a new client I like to do a two-week trial to see how the relationship works out. If they pay promptly and we work well, I proceed with the relationship. I have also had clients who have contracts ready as part of their business operations.
The one time I used a formal contract, I almost needed to enforce it as it seemed like I wouldn’t be paid. The client did pay and I never had to pursue any kind of action, but it illustrates the fact that you never know when you might need one. A contract is like insurance, you don’t know when you will need it, but you don’t want to be caught with it.
Contracts maintain relationships. Contracts are even more important when you are working with friends and family. Misunderstandings will happen and having everything written down in detail can save your relationship.
No matter who your are doing business with, if a contract scares them away it should send red flags about how they do business.
All about Trademarks
Freelancers often stress about a name for their business. Trademarks depend on the type of business and industry, just like with Delta airlines and Delta faucets. They may use the same name, but because they are in different industries, they don’t infringe on each other’s rights.
Here are three way you can check if your business name is available for use:
- You can check with www.uspto.gov for registered trademarks. It is important to make sure you aren’t infringing on someone else’s name.
- Search your state’s website to see if there are any local businesses with the same name. With so many businesses starting and closing each year, the information could be outdated, but it will give you an idea of what other names are out there.
- Do an old-fashioned google search. While it’s not a fool-proof plan, as some businesses may not have a website, it will let you see at least if they are online.
If you decide that a trademark is the route to take for your business, consult an attorney who specializes in trademarks. The process itself can take about a year and a half. With all the forms needing to be filled out correctly, making sure you have someone who knows what they are doing will keep the process moving forward. If your business crosses multiple industries, it’s important to get a trademark in each one.
Resources for You to Learn More
There are a number of different resources available to you if you are beginning your freelance career and need some guidance. Karen drafted the independent contractor agreement that is part of some of the course packages, along with a video to walk you through it. Karen’s website also offers templates you can purchase. Also check out Careful Cents for information about taxes and small business.
The half an hour flew by with Karen as we discussed some of the legal aspects of our freelancing businesses. She gave us a lot of things to consider when it comes to filing a business entity, protecting ourselves with contracts, and picking out a business name. Make sure to check out the resources that Karen offers if you need a starting point.
Karen Taggart helps online business owners feel confident and protected by making sure they understand the basics of business law, have a clear legal strategy, and have the custom contracts they need to go pro. When she’s not working on her business, you can find her spending time with her cutie-pie daughter and high school sweetheart hubby. Her recently-released Template Shoppe is now available on her website. Find out how to get started building a solid legal foundation for your business here.