The entrepreneur struggle is real. You steeled your nerves and launched your business. You dreamt of living your passion, doing what you love, and working for yourself. You were ready for the hard work. You were ready for the sleepless nights. You were ready for The Hustle.

But you weren’t ready for that customer to stop paying.  You weren’t ready for your best employee to steal your customers’ phone numbers and open their own business. You weren’t ready for that car accident. You definitely weren’t ready get slapped with a lawsuit.

Hopefully none of that has happened to your business yet. But you better get ready for it.

Stop losing sleep wondering if your biz can survive it when it does happen.

Before you go one day further in your business. It is time to get legit.

Protect Your Ass(ets) 

Form an LLC or INC

People who are still “sole proprietors” and “general partners” better wear clean underwear. Because it’s only a matter of time before they get caught with their pants down…

When you’re a sole proprietor or a general partner in a business, your personal assets are fair game for creditors if you can’t pay a business debt or get hit with a legal judgment. Maybe you think, “Let them try. I don’t have anything for them to take.” Think again!

And if you can’t afford to pay it, the judgment holder can get a lien against you. They can send you to collections. They can even seek to garnish future earnings. If someone sues you and wins (or if you settle) they can get a “judgement lien” that can hang like a cloud over your head for the next 20 years. In some circumstances, these liens aren’t even dischargeable in bankruptcy! So it’s an issue if you plan on applying for a loan…or buying a house or car…or having savings account…or other property anytime over the next 2 decades.

Partnerships can be even worse! They don’t add any protection for your personal assets and each partner is personally responsible for the other partner’s bad decisions. So, if your partner signs a lease, takes out a loan for the business, or is liable for hurting someone while on the job, you’re responsible, too.

You can form an LLC (limited liability company) or INC (corporation) even if the whole business is just little ole you. LLCs and INCs are “business entities,” which means your business has its own identity in the eyes of the law. The entity can own property and have a bank account. The entity can sue or be sued. And if the entity is maintained and funded properly, a debt or judgement charged to the entity lives and dies with the entity. It doesn’t pass through the owners.

Let’s address the objections up front. Yes, they require some attention! No, you can’t just form a company and forget about it. You have to register with your Secretary of State. You have to file an annual report. You may have to hold an annual meeting. You must keep a separate bank account and you have to put some money in that account. Totally worth it.

Whether to be an LLC or an INC is a decision that only you can make and it needs to be based on the advice of a professional who understands your business, your revenues, the number of employees, the number of people who want to be owners, etc. It doesn’t matter what your small-business-owning Uncle Bob thinks…unless Bob is a tax professional or attorney.

Insure Your Biz

Once you choose your entity, insure it.  You can’t predict what the future holds.

Your entity protects you. Insurance protects your entity.

There are a wide variety of insurance policies that can help you protect your business investment and protect you from liability or losses due to unexpected events. You might consider whether you need commercial auto insurance, general liability, garage liability, advertising insurance, professional liability insurance, workers’ compensation insurance (yes, if you have employees), and more.

While you want to be confident that you have adequate protection, your business doesn’t need every type of insurance, so don’t over-insure.  Don’t spend money you don’t need to spend. If you need more than one type of insurance, see if you can get a discount if you purchase business owner’s “bundled” policy. You might even be pleasantly surprised at how affordable insurance can be. Especially as compared to a new car. Or a lawsuit.

Safeguard Your Business “IP”

Intellectual property (the cool kids call it “IP”) is your creation. ALL businesses have IP. If you have a logo, a name, a slogan, a blog, a client list, a checklist for how to do your job, or a unique way of getting your work done, you have IP.

Your intellectual property has the potential to be a valuable business asset. Even if your intellectual property isn’t valuable today, it has massive potential value. BUT if you don’t identify it, register it, and protect it, IP can lose that potential value. Even worse – someone else can make money off your IP.

Copyrights provide authors the right to prevent others from using their creations for a limited period of time. Copyright law defines what can be copyrighted, who can claim a copyright, and how to claim legal ownership. Copyrights protect original works of authorship that are fixed in a tangible medium: e-books, blogs, graphic designs, photos, logos, computer programs, jingles, etc. (Do people still have jingles?) You’re allowed to use a copyright notice (© + year + Your Name + All Rights Reserved.) even without applying for federal registration.

A trademark is a word, design, or combination of words and designs that identifies a company’s products and services and differentiates them from others. Marks can be used to recognize a business owner’s exclusive use of a slogan, saying, word, or symbol. Mark owners are given the right to exclude others from using the same or similar mark on the same or similar products or services and creating confusion among consumers. The trademark symbol TM can be placed on your packaging, logos, and after your slogans even if you haven’t registered with the feds. To earn your little ® the federal examiners must decide your mark is distinctive and not merely descriptive.

There are a whole bunch of considerations surrounding federal registration of copyrights and trademarks that we can chat about another time.

Patents protect inventions – products, processes, or designs that provide a new way of doing something or offer a new technical solution to a problem. A trend of particular importance to entrepreneurs is the “business method patent” and are especially helpful for automated business and e-commerce methods. A patent owner has the right to stop others from making money off the patented invention – whatever is patented cannot be made, used, distributed, imported, or sold by others without the patent owner’s consent.

Trade secrets can be client lists, supplier data, business plans, research, development strategies, processes, computer programs, ingredients, and more. Trade secrets give your business an economic advantage … if they’re kept secret. There is no registration database for trade secrets. You protect them by keeping them secret. There’s a reason Colonel Sanders’ 11 secret herbs and spices were secret for so long (thanks a lot Wikipedia). Only give employees details about individual trade secrets when the information is essential to their job functions (a “need to know” basis). Implement physical and electronic file security procedures to keep sensitive data away from prying eyes.

When coupled with proper training and secrecy, non-disclosure and confidentiality agreements are also effective tools for protecting secrets – and enforcing that protection. Read on…

The Pen is a Mighty Shield…and Sword.

Entrepreneurs learn early that business gets done based on relationships, and unfortunately many of us cement the agreement with a handshake, or a hug, or a beer (this is a no judgment zone).  And while technically, most verbal agreements are valid and enforceable, when life and relationships go awry, it really helps to have a signed agreement. To be truly “legit,” every single business relationship you have should be written down and signed. If you have an agreement with someone WRITE. IT. DOWN.

What business relationships are ink-worthy?

  • Business partners, co-owners, shareholders
  • Employees (permanent, temporary, seasonal)
  • Independent contractors (freelancers)
  • Interns
  • Volunteers
  • Clients & customers
  • Vendors & suppliers
  • Landlord
  • Website visitors

Written contracts are essential tools in your business toolbox. They can be used as “shields” (for protection) and “swords” (for enforcement). Well-written contracts can literally save your ass(ets).

Contracts (aka Agreements in case that feels more user friendly) are your chance to document exactly what you were agreeing to when you embarked on your relationship. If there is ever a question or dispute, the contract documents what was in your mind when you shook hands.

So, you’re doing business with a business person in your community who you know, like, and trust. (Or your BFF.) Why in the world do you need an operating agreement?? There are so many reasons. In Florida, there are 2 big ones:

  1. If you formed a corporation (INC), you are required to have Bylaws. You don’t need them on file with the state, but you need them in your corporate files.
  2. If you formed an LLC or an INC the state has an operating agreement for you – in the state statutes. There are default rules that say “these are members/owners/partners rights, obligations, and duties, and these are the steps you need to follow in business.” In Florida, check out Title XXXVI (36) and its chapters. They are “default rules” that the state applies unless you tell them differently.

If you don’t have an operating agreement or Bylaws, these are the rules that apply.

  • Did you know that if you BFF gets hit by a bus (sorry, so sorry), you could end up in business with their spouse, or parents, or cousins…depending on who inherits their share in the will or through probate?
  • Did you know that if there’s a “deadlock” (tie vote), a member or manager can petition the court to dissolve your partnership?

Think about…and write down…how you want your business to be run if things are going well, and give yourself an exit plan if things aren’t going so well. Get it in writing in the beginning, when everyone is still brimming with bright, shiny optimism.

Ever heard of a “non-disclosure agreement” or “NDA”? It’s a contract. And it is one of the most critical ways to protect your IP. If you have trade secrets (and if you don’t think you do, you haven’t been paying attention), you should make everyone sign an NDA before you discuss your business with them. A well-written NDA in an employment or contractor agreement gives you a layer of protection, and the teeth to keep your secrets secret in case someone tries to get squirrely.

There are a bunch/ton/slew of other reasons to document agreements in writing, and there is a different contract or clause for just about every relationship and situation. While even a template contract downloaded from the internet is better than nothing, your best option is to talk with a lawyer who can custom-tailor a contract to your specific business needs.

If you have a website visitors and want to know what that has to to with contracts, the next section is for you.

“WWW” does not stand for Wild Wild West

There are rules.

A couple of decades ago, before we were all on MySpace and e-Commerce was a word, you could do pretty much anything you wanted on the wide-open world wide web. But times have changed. There are rules.

If your business has a website, there are a couple of rules you really need to know about. (If your business doesn’t have a website, and you’re still in business, WOW. And, you’re off the hook for this section. Feel free to jump to the end.)

The Federal Trade Commission makes and enforces the rules of web content deemed “advertising.” The more specialized your business, the more likely there are rules for you to follow.  The BDD (big damn deal) is that claims you make in advertisements must be truthful and can’t be deceptive or unfair. You need to have the proof to back it up. Keep in mind: advertisements aren’t just pay-per-click Google or Facebook ads. Ads can include blog posts and emails, too.

Oh, and if you email, don’t SPAM. The CAN-SPAM Act (yup, it’s really called that) applies to you. It sets requirements for email format & content, gives recipients the right to opt-out, and spells out tough penalties for what happens to your business if you violate the act.

Do you obtain and store any information from people who visit your site? If you have a contact form or a newsletter sign up, you obtain and store contact information. If you have a store or sell products online, you probably get contact information AND financial info. Either way, you need a Privacy Policy. It’s technically the only thing you are required to have on your website. You need to tell your visitors how you will use and protect the information they give you. If you violate privacy rights – even accidentally, because you wouldn’t do it on purpose – the FTC can slap you with fines and your web visitors can sue you.

Oh, and if kids visit your website or you sell kid-related products, your T&C better have clauses that explain how you comply with COPPA (Children’s Online Privacy Protection Act). And all websites that serve Californians have to comply with California’s Online Privacy Protection Act (CalOPPA). Depending on your online self and service, there are other federal regulations (health information = HIPAA and financial information = Gramm-Leach-Bliley Act).

Terms & Conditions are essential to cover your ass(ets) online. The Terms & Conditions section of your website creates a contract that your visitors accept when they decide to use your website, subscribe to your email list or newsletter, or purchase from your website. Well-written T&C have standard contract clauses and are written to specifically cover your business: ownership of intellectual property, raising concerns and complaints, state and county where lawsuits can be filed and litigated, and limits on your financial liability if they accidentally get a virus or their computer blows up after posting on your blog or if they decide to post copycatted material on your site. Oh, and if kids visit your website or you sell kid-related products, your T&C better have clauses that explain how you comply with COPPA (Children’s Online Privacy Protection Act).

Finally (for this section), in business, nothing “goes without saying.” You need a disclaimer on your website if you have a blog or ANY information on your website that gives advice, recommendations, or endorsements. It’s not just attorneys who can be sued for giving bad advice. Regular business people posting on their websites have been successfully sued for failing to tell people that what you’re posting is an advertisement or your opinion, and that you don’t guarantee results.


OMG. That’s a lot of stuff. And it’s only the tip of the ice burg.

Do you even know where to start? No worries. We’ve got your back.


Click here for THE ENTREPRENEUR’S RADICAL “GET LEGIT” BUSINESS START UP CHECKLIST (or the #TERGLBSU CHECKLIST, if you’re into the brevity thing). It’s a radical 8-STEP checklist to walk you through what it takes to get legit and stay legit … from start-up to success.


But wait…there’s more! Don’t settle for legit. Step it up. Be a Small Business Badass.

Hit up Radical Administration today about how I can make you a Small Business Badass by thinking and acting and building capacity like a big badass business. I’m not a life or business coach. We talk you through your business plan and do the work to get you legally legit and built for speed. We have a 90-day plan that can get you legit with a quickness and add-on plans for building your business to be a  people-helping, money-making, badass factory of awesome.

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