I’ve been a business and privacy lawyer for going on 10 years. The questions clients ask when we first meet are important questions. I always welcome answering them – and thought I’d share them here, too. After all, knowledge is power, and knowledge powers your business.
Here goes.
Who are your typical clients?
I typically work with small- to mid-sized companies that are growing and figuring out they have legal needs that aren’t being met. My clients usually don’t have an in-house legal staff and instead view me as their outside general counsel. My clients represent a variety of industries – many in cyber security and IT, because of my privacy law experience. Several are in the food and beverage space, because they need my trademark guidance and support with vendor agreements. I also work with a number of marketing firms that work with healthcare providers, so privacy is a big area of concern. That’s just to name a few industries.
What do I need to think about when I name my business? Do I need to trademark it?
Before you name your business, think about your long-term business plans and what’s important in promoting your business.
For example, will you always be the face of your business or will you bring on partners? Your answer will determine if you want to consider incorporating your name into your business.
Will your business always be online only or will there be a physical presence? Or, will your product and service offerings shift? Think about Netflix. It started out as a DVD rental service, in which customers received DVDs by mail and returned them by mail. People wondered what the Internet had to do with it. But 20 years or so later, Netflix is a household name, and it’s clear that company foresaw the advent of streaming digital media.
Will your business be local to Charlotte, the Carolinas or (insert locale here), or will it operate in other states or countries? Your answer will determine a lot of things and among them whether there are companies with similar names in the markets you plan to be.
Once you have selected your company name, you will want to vet it on your state’s secretary of state website, making sure it’s not being used by another firm in your state.
But you don’t necessarily need to trademark your company’s name. If you have a unique name in mind – like Netflix – a trademark likely makes sense. But maybe you have a hyper local business and want to capitalize on Google searches by having a more generic or literal name like Charlotte Wedding Photography. The name that’s right for your company might not be unique enough to trademark, but it might be just what you need to drive business to you.
What type of entity should my business be?
It depends on your plans for your business. Do you plan to expand to other states? Will you be local only? Physical locations or only online or both? How will you or do you fund your business? Are there – or will there be – other investors, owners or partners?
Most often it’s going to come down to establishing your company as a limited liability company (LLC) or a corporation. LLCs are the easiest to set up and maintain. Outside of a simple annual report, there usually aren’t many annual requirements or formalities. A corporation has more structure and formalities, but might be preferred by investors.
A couple of other things to note. There’s also a professional limited liability company (PLLC) for those in certain industries – namely legal, medical and accounting. And people often confuse an S corporation for a business entity rather than a tax structure. A business can be a registered LLC that files taxes as an S corp. For more, talk with a business attorney and a certified public accountant.
Do I need an operating agreement – something beyond articles of organization or incorporation?
Your business will have articles of organization if it’s an LLC and articles of incorporation if it’s a corporation. And if you are the sole proprietor of an LLC and never bring on other partners, this might be sufficient; a corporation still has to have bylaws.
But if you have other partners or plan to bring on partners, an operating agreement becomes more important. An operating agreement spells out who the managers are, who can join the business, ownerships stakes in the business and so on. I recommend an operating agreement to all of my clients. It legitimizes your business.
Even if you are a sole member, with no plans of expanding, consider that the operating agreement means treating your business like the real business that it (hopefully) is. It will only help lend credibility if you are ever applying for a business loan or fending off a customer complaint or lawsuit. It’s a worthwhile effort for the added legitimacy, credibility and protection.
What kind of policies do I need for my website?
I always recommend a privacy policy and often a terms of use policy, as well. Any business website, especially one that collects any type of consumer information – like email addresses for an electronic newsletter or payment information – needs a privacy policy.
And a terms of use policy is important for business that sell memberships or subscription services, and it would spell out how consumers receive the service they purchased. Terms of use policies also come in handy if people are allowed to post comments on your website. You’d want to let people know you will delete comments that are racist or incite violence, for example.
Lately during the pandemic, I have written quite a few website disclaimers – for people doing online fitness classes, for example. These disclaimers basically say that the customer is using the service at their own risk.
What kinds of contracts do I need for my business?
This question – like the others above – begs another question. What does your business do?
Depending on the answer, there might be very specific contracts that your business will need.
In most cases, the essential contracts for your business will be: client agreement, vendor agreement, non-disclosure agreement, and subcontractor agreement. I also often work on privacy addendums to contracts.
Closing thought: Contracts can be written and revised as your business evolves. Your business can change how it’s incorporated or update its website whenever needed. The only thing you can do wrong is to do nothing at all – and not seek professional counsel as needed.
