5 Scary Legal Situations Your Business Should Prepare For
“Unfortunately, scary legal situations can happen to anyone at any time. Luckily, there are things you can do. Here are five scenarios I see all the time - and how you can stop these problems from happening to you…
1) The Business Partnership Gone Bad
Problem: You start a business with your BFF, but things go south and she bails. So you build the business up yourself, you start making a profit, and she suddenly reappears demanding half of all that you’ve earned. You didn’t think to draw up a partnership agreement (you were friends after all) and now it’s her word against yours.
Solution: Draw up a partnership agreement before you invest any money or take on clients together. If you can’t afford to hire a lawyer, write up an agreement with basic terms like who owns what percentage of the business, how profits are divided, etc.
2) Someone Steals Your Photos, E-Book, Course, Blog Post, etc.
Problem: This stuff, called intellectual property, gets stolen all the time. Intellectual property includes copyright, trademarks, and patents.
Solution: You can protect yourself by registering your copyright and trademarks. Copyright protection is automatic, but you’ll want to register your work so that you can sue under the federal copyright statute and be eligible for statutory damages and attorney’s fees if you’re successful in litigation.
3) You Get Sued, and Your Personal Assets are at Stake.
Problem: Nothing is scarier than having a process server show up at your house with a lawsuit, telling you that you’ve been sued. Except when that lawsuit ends with you having to hand over the 100k in the bank account you’ve been saving for a downpayment. Imagine this scenario. You’re innocently running your online business. You haven’t wanted to concern yourself with the “legal stuff” so you don’t worry about forming a legal business entity. You’re just running a small online business and blog, right? Wrong.
Solution: Even if you’re a blog, even if you’re a small online business, you need to protect your personal assets by forming a legitimate business entity and complying with all of the formalities.
4) You Had a Deal with Someone, But Now the Details are Fuzzy.
Problem: We all have a friend who “doesn’t remember” borrowing our romper. Verbal agreements aren’t going to cut it for your business.
Solution: Contracts. Contracts spell out the expectations of each party, establish pricing and deadlines, and set forth consequences for when one party doesn't do something they said they would do. No matter what you’re selling, you need one.
5) You Bring on an Independent Contractor or Short Term Employee to Help with an Aspect of your Business, and Then They Quit and Spill your Secrets to your Competitor.
Problem: Your secret is safe with me and my best friend. But seriously, some people aren’t that good at secrets. Luckily, this isn’t an excuse when you have a non-disclosure agreement.
Solution: This kind of contract creates a confidential relationship between parties. So whether you are consulting with a potential employee or speaking to a potential investor, a Non-Disclosure Agreement will keep your confidential information a secret.