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Transitioning from employee to small business owner
You were probably an employee before you made the decision to create your own business. Heck, you might still be an employee! This section is for those of you who still have day jobs on your busy plate. When it comes to the law, side-hustling is more complicated than you might think. Among other things, you want to make sure that your employer doesn’t have any rights to your side business.
- My boss doesn’t know about my side hustle. Do I need to disclose this? This is a great question. At some point, you’ll have to decide if you want to be upfront with the boss at your “day job” about your side job. If there’s some policy or contract that requires you to disclose this, then there’s your answer. Otherwise, you’ll have to use your best judgment given the situation.
- What precautions should I take while side-hustling? First, look through your employment contracts for any language suggesting that your intellectual property is shared with or owned by the employer or if there are any outright bans on working a second job or starting your own business. Then, set clear boundaries to keep your side-hustle activities separate from your full-time job (for example, don’t use an office computer to work on your side-gig).
- What employment forms limit my ability to work on my side job? Check offer letters and employment agreements, confidentiality agreements, intellectual property assignment agreements, non-compete or non-solicitation agreements, stock option agreements, non-disclosure agreements, and employee handbooks.
Forming your business
Every successful small business confronts the same question at some time or another. That question is how to go about officially forming your business.
When it comes to officially forming your business, or “choosing the appropriate business entity” as lawyers would say, you have options. In most cases, you’re deciding between a sole proprietor and an LLC. Those options, in addition to others, are discussed here.
NAMING YOUR BUSINESS
- What can I do to make sure the business name I want is available? Follow these steps.
- How important is choosing the “perfect” business name? It’s important, but don’t spend too much time dwelling on this. Learn more (and feel free to scroll to Part 2).
- When I’m choosing a name for my business, should I be thinking about trademark laws? Yes. Besides doing a thorough search to make sure the name is not already protected under trademark law, you should make sure that the business name you select is protectable under trademark law if you pursue trademark protection in the future. Here’s what I mean.
- What is a sole proprietorship? A sole proprietorship is the easiest and most common way to form a business. If your business is a sole proprietorship, that makes you a sole proprietor. The main benefit to being a sole proprietor is that it’s easy and requires little paperwork. The main drawback is there’s no legal protection. Since there’s no legal distinction between you and your business, you and your personal assets are 100% on the hook if your business ever gets sued.
- What do I need to do to start a sole proprietorship? To start a sole proprietorship, you don’t have to do anything other than make money from a business activity as the sole business owner. Okay, you might need to get business licenses and permits depending on the industry you’re working in, but that’s it. You can operate under your own name or create a fictitious name for your business (commonly called a “DBA”—short for “Doing Business As”—or an “Assumed Name”).
LIMITED LIABILITY COMPANIES
- Should my business be a sole proprietor or an LLC? Probably an LLC. Here’s why.
- What goes into the cost of getting an LLC? More than you might think.
- What’s an operating agreement? It’s basically a contract that the LLC has with itself about it will operate. You need an operating agreement for your business. Learn more.
- I’m pretty entrepreneurial, and I have plans to start multiple businesses. Would each of these businesses need to be a separate LLC? Not necessarily. Here’s a setup that might work well for you.
- What’s a registered agent? Think of a registered agent as the official contact person for your business. Among other things, registered agents accept service of process on behalf of your business if it ever gets sued. All states require that businesses have registered agents.
- Can I be my own registered agent? Yes! Just keep in mind that a registered agent’s contact information is made public.
EMPLOYER IDENTIFICATION NUMBERS
- What’s an Employer Identification Number? It’s like a social security number for your business.
- What’s the difference between an EIN and an FEIN? There is no difference! It’s the same thing.
If you’re a creative, then pay attention to this section. Almost everything creative about what your business does falls under the umbrella of intellectual property.
For the most part, intellectual property falls into four categories: copyrights, trademarks, patents, and trade secrets. We break all that stuff down here.
INTELLECTUAL PROPERTY BASICS
- What does “intellectual property” mean? Intellectual property is a legal term that’s all about your creative side. It refers to what your mind created. It’s the intangible stuff—ideas and concepts. There’s a lot of categories that fall under the umbrella of intellectual property, including copyrights and trademarks.
- What does “copyright” mean? Copyright is a category under intellectual property. Copyright is all about authorship and expression. If you created—or “authored”—something and have expressed it in some form, then you have ownership rights under copyright law. Think song lyrics, paintings, photographs, books, and blog posts.
- What does “trademark” mean? Trademarks are all about branding. A trademark is a symbol, word, or words that represent your business. Think business names, logos, slogans, and product line names. Learn more here.
- I’m totally confused when it comes to copyrights. Where do I even start to learn more about this? Start here.
- What can and can’t be copyrighted? You can find a list of examples here.
- Don’t I get copyright protections automatically just by creating the work? Yes, but without registering your copyrights you can’t enforce them. And that’s a problem. Learn more.
- What kinds of things can get trademark protection? Anything that relates to your business’s branding. Typical trademarks include business names, logos, slogans, and product lines.
- Why are trademarks important? A brand distinguishes a particular product/service from a competing product/service. And that’s the point of a trademark. It’s a tool that businesses use to prevent confusion in the marketplace. Learn more.
- What’s the deal with those trademark symbols: ®, ™, and ℠? The ® symbol means that your mark is a federally registered trademark. The ™ means that your trademark (for goods) is not federally registered. The ℠ mark means that your service mark (for services) is not federally registered. Learn more.
- How does my business “own” a trademark? A trademark is created when you use branding in commerce, and that branding distinguishes your goods or services from other businesses in your industry. Learn more.
- How does my business protect my trademarks? When a trademark is created (by being used in commerce), you automatically get some protections. But those protections are limited to your geographic region. For broader and stronger protections, you should consider registering your trademark(s) at the federal level. Learn more.
- My business is pretty new. Should I apply for a federal trademark to protect the name so no one else can use it? In general, I recommend holding off on thinking about registering trademarks. Here’s why.
- I’ve decided I want to protect my business name through trademark law. Can’t I do this by myself without an attorney’s help? Technically, yes. But your chances of success increase by 50% when you work with an attorney. And filing fees are not refundable. If your business can’t afford to hire an attorney to represent you in applying for a U.S. trademark, that’s usually a good sign that the trademark you want to protect has not become an asset worth protecting yet. Learn more.
- What kind of business name should I choose if I want it to be protectable under trademark law? Choose a business name that is suggestive, arbitrary, or fanciful. For practical purposes, a suggestive business name is usually the ideal option. What do these terms mean? Learn more.
- What should I do if someone accuses me of trademark infringement? Follow these steps.
- What should I do if someone is infringing on my trademark? Follow these steps.
INFRINGEMENT & ENFORCEMENT
- I just received a notice from some website (like Etsy) saying that my online store is violating someone’s intellectual property. What do I do? Read this.
- Should I take my business off Etsy? Yes. There are strong legal and business reasons for getting off Etsy and selling your products on a platform you own. Learn more.
- I want to protect my intellectual property, but I don’t want to be a jerk about it. How should I conduct myself with violators? Act like a bodyguard and not like a bully. Learn more.
Ah, website agreements. That legal mumbo jumbo that you have to accept in order to use online services. I know, no one reads them.
But you need them for your website. The law is interesting here. What’s the worst that could happen if you don’t have website agreements on your website? We don’t know. There’s not really a case that spells out what the penalty is . . . yet. But do you really want to put yourself at risk of being the test case to see what happens if you don’t have these? Didn’t think so.
For those questions that don’t really fit into the sections above.
BUSINESS AND MINDSET
- Is there a business advantage to adopting an “abundance mindset” and staying positive? Yes! Learn more.
- Is there a tool you recommend for scheduling your social media posts? CoSchedule.
- Do you have any recommendations for staying productive? Keep a not-to-do list.
- Do you have a fun, upbeat playlist that you recommend? Yep! Here’s an awesome playlist created by suggestions from our firm’s Facebook group.
FOR HANDMADE SELLERS
- Should I get off Etsy? YES!!! Here’s why.
- I just got hit with an infringement notice. What do I do? Read this. (This blog post relates to Etsy specifically but applies to infringement notices from other platforms as well).
- What’s the difference between a model release and photo release? A lot. Learn more.
- Does Indie Creative Law help form nonprofits? Not at this time.
- Should my business be a nonprofit? Maybe, but be sure to ask yourself these two questions first.
About Indie Law, our team, and our Facebook group
Working with an attorney might be a new thing for you. And even if it’s not, you probably haven’t worked with a firm like Indie Law before.
If you’d like to learn more about how our firm works and what kinds of services we provide, you’ve come to the right section.
ABOUT INDIE LAW
- What services does Indie Law offer? We offer subscription plans, flat-fee packages, and consultation calls for creative small businesses. Learn more.
- I’ve got more questions about your services. How can I get my questions answered? Click here to schedule a discovery call.
- Where is Indie Law located? Indie Law is based in Chicago, Illinois, but we have clients all over the country. Joey also travels to St. Louis frequently to check in with clients who live there. If you are ever in Chicago or St. Louis, hit us up!
- How do you come up with your pricing? Even though we don’t do “bill by the hour” projects, we price everything based on the amount of time it would take to do the legal work for that service. If we did charge hourly, we would charge $300 per hour.
- I’m fighting with another business or client. Can your firm help? Probably not. Our law firm does not accept litigation matters. That being said, we might be able to help you take a strategic path that doesn’t involve litigation.
- Does the firm handle patents? Nope. But we’ve got a great recommendation for you.
ABOUT OUR FACEBOOK GROUP
- Does your law firm have a Facebook group? Absolutely! Indie Law maintains a growing and active group on Facebook called Friends of Indie Law. It’s a space where creatives can support each other, learn about the law together, and maintain a positive perspective about their business. You’ll find a combination of legal information, practical business tips, and opportunities to connect with other creatives across the country. Join the party!
- What are the community guidelines for members in that group? You can find more info about that here.
- Can we ask legal questions in the group? Yes, but keep in mind that Indie Law can only provide general legal information in the group, not specific legal advice. Indie Law receives lots of questions from the group members, so we can’t guarantee that your question will be addressed. If you have a specific legal question that you need answered, we recommend scheduling a legal consultation call.
- Why did Joey start Indie Law? Learn more.
- What’s Joey’s favorite color? Yellow
- What’s Joey’s favorite TV show? Boy Meets World
- Does Joey have kids? If pets count as kids, then yes! Cory Matthews the cat, and Mr. Feeny the dog. See a picture of them together here. (I’m not kidding about being a Boy Meets World fan.)