Learn the essential legal requirements every small business owner should know. Attorney Ana Juneja breaks down business structures, trademarks, contracts, and how to protect your brand legally from the start.
IE 447: Legal Requirements for Small Businesses with Ana Juneja
Ana Juneja is an intellectual property and business attorney who helps influencers, celebrities, athletes, small and medium business owners, and corporations with their business and intellectual property needs (patents, trademarks, and copyrights).
She does a lot of small business work with athletes since the new NIL changes. She has a blog with many information topics on her website , Ana Law.
What are the first legal steps someone should take when starting a small business?
The first step in your business should be a business plan. Many lawyers and people in business don’t talk about this. Businesses seem to fall into two categories: the accidental business and the intentional business.
Intentional businesses tend to be sloppy. People always wanted to start a business and they do so but don’t plan it out to the detail that is required to be successful.
For the accidental or unexpected business, they retroactively create a business without a plan or details.
Begin with a business plan and create where you anticipate everything about your industry.
Do your research and lay it out to see how you can make the numbers work and how much revenue you want. Be industry and business-specific.
There is a reason that successful business people succeed, and it is because they make money. The business plan is what is going to make you money, so don’t skip it. There is no success without that planning.
What are some of the key elements you feel need to be in the business plan?
Let’s say you want to make $1,000 a month in profit.
- What do you need to make if your product or service has a physical or time cost to it?
- What do you want to make? What will it cost you to deliver the product?
- How are you going to acquire people to purchase that from you?
- What is your projected growth?
- What are your different opportunities to get customers and clients?
- What is your competition like and what are they doing?
- How much do you want to make and how are you going to make it?
The number one key component of the business plan is to figure out how you are going to make money.
You want to put everything in the business plan about your business. What are you going to sell? Where are you going to get them? Who are you going to hire and where will you find employees?
There are lots of templates for business plans online. You can Google your business “candy shop business plans” and that will generate some ideas.
You are also going to include marketing in the business plan. Who is your audience? You want to be able to find those customers to make the sales so you have the revenue coming in that you are anticipating.
How do entrepreneurs choose the right business structure (LLC, sole proprietorship, corporation, etc.)?
This is done on a case-by-case basis. Ana typically recommends an LLC. It is a cheap, easy, non-formal way for you to protect yourself and limit your liability.
It is a small amount of paperwork so you might need to hire a lawyer or if you want an anonymous LLC, it might be a few thousand dollars. For the protection you get, it is very inexpensive.
When choosing between an LLC or a sole proprietorship, when it comes to the legal aspects, there is almost no scenario where a sole proprietorship is a good idea.
Starting a business or being an entrepreneur is a luxury but the legal aspect of business is a requirement. If you have the capital and flexibility to enter business, you have to be responsible and not cut corners by creating an LLC.
If you have to decide between an LLC and a corporation, you should talk to an attorney. It will depend on where your investors come from, how many people are interested in the different splits of shares of the business, etc.
If a corporation makes sense for you, you are probably not an influencer or a small business. If you are getting outsider funding, a corporation might make more sense.
Most start-ups and small businesses, especially in the online space or creatives, tend to decide between being a sole proprietorship, LLC, or not doing anything.
Some do a DBA but that only allows you to cash checks in another name. It has no value for any other purpose.
An LLC is the best way to protect yourself in business. If you don’t choose to spend a small amount of money on an LLC, you won’t be successful in business. Being able to have that coverage for yourself is necessary. Talk to your tax accountant about it. It will vary by state.
S Corp status only comes after you have an LLC or a corporation and then change it. This determination is based on your numbers. If you are making a certain amount of money, becoming an S Cort will save you some money.
What kind of licenses or permits do small businesses typically need?
This is very industry-specific. You need to research your industry because businesses are highly regulated.
If you are in the restaurant business, for example, you will need a liquor license if you want to sell alcohol.
If you are running an e-commerce store and your business is based out of Florida, you will need things in Florida but opening a pop-up shop in another state will require a business license in that state.
If you have a certain amount of sales in different states, you will need sales tax licenses. It depends on the type of product or service you are selling and whether it is remote sales or in-person.
You never want to operate a business without a permit. Check your county, state, city, and federal requirements. All the information you need should be available online.
These things should be detailed in your business plan along with the associated costs of obtaining licenses. Maybe you can get certain types of licenses online but other types of licenses are more complicated and might need an attorney.
If you are capable of handling your own paperwork and governmental filings, you can do it yourself. Think about whether it is worth your investment of time or if you should hire an attorney to deal with those things for you.
You don’t want to skimp on insurance or licenses in your business. You want to make sure you are covering yourself.
What key contracts should every small business have in place?
When people get their LLC, there are three legal components: filing the LLC, getting the articles of organization, and getting an EIN.
You also need an operating agreement for the LLC. If you have a corporation, that is called the bylaws. This document tells how your business will run.
You want to have a very well-drafted document that is your operating agreement, because you want control over how your business runs when different things happen.
If you don’t have this, you have to follow the state’s rules for your business. That may not be how you want things to happen in your business. The operating agreement will control that from happening.
This is a more critical component when you have multiple people in the business and it ends. You need to outline how things will be split. There are many key components in this and many people skip this step because every state does not require this but it is important.
You should also have basic vendor contracts that are specific to your industry. How do you want to get paid? How do you want to get the items you pay for?
Vendor, clients, and customer contracts are basic things but when you do not do these things, you may not get paid or other things can happen and you won’t be protected. You need to sign contracts because it is hard to retroactively change things.
You also want to have NDA’s (non-disclosure agreements). When you are discussing things with people or when you are having things manufactured from overseas, you want to have an NDA.
You don’t want to be ordering stuff from a manufacturer and giving your designs and information away when they are just going to sell it to other factories. It is so important to have an NDA.
A compliant website is another thing that many businesses miss. You have to have a certain language on your website, privacy policy, disclaimers, terms of use, terms of service, pop ups, cookies, California compliance, ADA plugins, etc.
You can be sued by others if your website is not ADA compliant and you might have to pay. When you are in business, people are going to try to exploit you.
Taking a little bit of time to have your contracts, setting up your business in a compliant way, and having your website be ADA compliant are shields that can absolve you from having minor headaches that are almost guaranteed to happen if you don’t do it.
What steps should a business owner take to protect their intellectual property?
This is a big topic right now with AI (artificial intelligence). It is easy to grab videos, reshare, etc. Intellectual property is going to fall into 2-3 categories for small businesses.
The first one is patents and only applies if you are inventing something such as a new technology, chemical, or fashion item. Most businesses are not creating something totally novel. Most are selling a service or product that is already on the market.
Trademarks protect brands. This is going to be any element of your brand; your name, logo, slogan, tagline, subscriptions and membership lines, course names, design elements, specific colors, and very specific product packaging. The trademark protects all of those things.
Copyright protects your content. This includes videos, music, photos, books, poems, literature, software, architecture, patterns for fashion, etc.
When getting your logo, slogan, and top-selling products, names for them are important to be trademarked. Having an LLC or a domain means nothing. If someone trademarks your name, they can sue you and stop you from using it.
You never want to operate your business without a trademark, especially for your main brand name. Losing a domain and switching your brand name is the most expensive rebrand that a small business can have and they typically cannot survive that. Trademarks are a no-brainer.
Let’s talk about copyright and AI. The reality is that you don’t own any content that AI creates. If your entire business model is predicated on things AI has created, there is still a gray area of law to determine whether or not you can sell them and profit from them.
If you are doing that, you are very vulnerable. Anyone can recreate it, copy you, and rip you off and you cannot do anything about it. Don’t invest a lot in this business model.
The biggest concern that a lot of content creators have is that AI is able to pull pieces of their content and it gets used by others. The real question they have is about how to stop this from happening.
For example, they have created a DIY painting tutorial that shows specific steps and words on what to do. They see this is being used in someone else’s creation and they are not being given credit or links back to their work.
This is done on a circumstantial basis. Many people go to Ana and think they have been copied when they haven’t.
If someone legitimately did copy you, you do have protection. You can file copyright violation requests on the platform or DMCA. “The Digital Millennium Copyright Act (DMCA) of 1998 is a federal law that is designed to protect copyright holders from online theft—that is, from the unlawful reproduction or distribution of their works.”
You can file a copyright registration and sue them in court. You can go to the copyright claims board. There are lots of options if you have a real case.
You have to be thorough and explain what is going on. If you cannot explain why it is the same or find your original content, you don’t have a case. You have to fully explain why it is copyright infringement.
If there are little clips they have taken from your videos or music, that is obvious. Platforms will typically take the content down or they will explain the reason why they won’t take it down. Most people who file those things don’t file the form correctly.
If you have proof, that makes it easier to prove. Some people who get copied don’t feel they have to give real facts about the case. You need links, videos, and proof of both the original content and the copied materials. The platforms are not going to do this for you.
You need to imagine you are a lawyer explaining it to a jury and be thorough and detailed. Present the real facts. Otherwise, you are going to file it incorrectly and then have to pay a lawyer to handle it. There are better uses of your funds. We feel violated and taken advantage of. By providing the evidence, it makes it much simpler to get it quickly and quietly taken down.
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