Is Your Business Legally Covered? You Sure About That …?

We’re delighted that Rachel Rodgers agreed to be a guest on the show. Rachel covers a topic that we haven’t really discussed on our show yet, which is the legal side of running a small business. I know that for a lot of small businesses, especially for us creative types, as soon as anything legal is mentioned, a blank wall comes up in front of their eyes and they get really worried. But, Rachel has produced a product that helps small businesses with the legal aspects of running a business, and has done it in a really entertaining format. The product is called Small Business Bodyguard.


Rachel:  Small Business Bodyguard is our DIY legal kit. I guess I was really just trying to download my brain: here’s what I do when I work with my clients in my firm, break it down, make it really easy, sort of serve up exactly what to do on a silver platter, and also make it entertaining because no one’s going to read a legal guide unless it’s fun. We really wanted to come up with a clever, catchy brand and make it somewhat sexy, interesting, and fun. We have a lot of pop culture references and jokes in this guide because we want people to actually read it and absorb the information.

How I came about creating Small Business Bodyguard is it actually had a predecessor. In my firm, I talk to small business owners pretty much everyday. I talk with them and figure out exactly what legal needs they have for their business and let them know what my fees are to solve those problems. Many of them were just terrified or they couldn’t afford it. They were early on in their business and just not ready to hire an attorney or simply had a block about the idea of hiring an attorney. I hated having to send them off with really nothing to refer them to, to say, “Okay, if you can’t do that, at least do this.” You want to give them advice to go to a particular website or buy a particular book or something, but there really wasn’t anything out there that I felt I could recommend and would be willing to vouch for, because there’s a lot of stuff out there to solve “legal problems.” However, a lot of it is sketchy and who knows who’s writing it? There are lots of articles out there that are written by people who aren’t lawyers and really don’t understand this stuff. I felt bad that I couldn’t send them somewhere. It was like “Okay, bye-bye. Go screw that up. Have fun.”

So I decided to come up with a sort of mechanism to teach people the stuff that I know so that they can handle the legal side of their business. I taught a class called, I think, “The Online Entrepreneurs Non-Confusing Guide to Business Law.” Super boring name, super boring course. It was a four-week, incredibly boring course of four 60-minute lectures, with contract templates and worksheets and different stuff that I was giving away with the course. There were about 10 or 12 people who took it, and they said it was really helpful, but it was so boring to teach. I was the teacher and even I was bored with it, so I know the people listening were bored. Then I thought, “All right, I need another solution. This isn’t it.” I had tried it, did that, and it didn’t really work. I realized then that I really wanted it to be a resource that people can just go back to whenever they need it, that’s just there for them, not like a class. Nobody wants to go to law school unless they signed up for that. That’s where the idea for Small Business Bodyguard came from and that’s why I worked really, really hard to make it entertaining, because boring is just unacceptable.

Meredith:  I think most people are scared of the boredom, too, in some ways. Our local small business economic development organization offers tax strategies for businesses, and I’m like, “Oh, some day when I have a lot of caffeine, I will go and take advantage of that.” It’s really interesting that you’re talking about the evolution of Small Business Bodyguard, and I want to call that out as a lesson to people that format does matter. It’s all pretty much the same information. You say “I’m going to teach a class on X” and classes are many people’s automatic first go-to. However, when you think about how your end users are going to use your product, especially something like Small Business Bodyguard, what they want is to have the binder or whatever so they can to refer back to it when they need it. For instance, “I’m hiring a new virtual assistant, what do I need for that?” or “I’m doing my first JV partnership, what do I need for that?” or “I have a client and want to make sure they actually pay me. How do I do that?”

I think that’s a really good lesson to learn and it’s good to keep in mind that everything is iterative. Just because you do a class and it’s not exactly what you want, don’t throw the whole class away and the whole idea in the garbage can. Instead, change it — think more about your target audience and tweak it to get better and better and better each time.

Rachel:  I just want to add that when you’re creating content, you’re creating intellectual property, which has a lot of value, so you never want to throw away intellectual property that you’ve created. You want to package it and repackage it until you find the right fit so that it’s a hit and it’s really helpful to the end user. There are many different ways you can play with stuff you’ve already got. I see people who love to create new product after new product after new product, instead of just focusing on the sales and the marketing and improving the products they already have. When we launched Small Business Bodyguard last year, we wanted to make it better. We don’t want to create 8,000 products. We want to take what we’ve got and make it even better and serve our customers better.

Jasper:  There’s also the aspect that people don’t need legal stuff all the time. They need it when they need it. Having your Small Business Bodyguard as a reference guide is so helpful. You include a lot of templates needed for particular areas of their business, which is a very useful resource to be able to go to when they need it.

Rachel:  Right.

Meredith:  Rachel, you practice law in New York and a few other states, and you have the Small Business Bodyguard which has some really good general templates for people. Throughout your guide, you say, “This is general. You need to see what your state law is.” So let’s say a small business person has Small Business Bodyguard. When would be the right time for someone to bring an attorney in on their team?

Rachel:  Probably as early as possible. The real value of working with an attorney is not necessarily always the work product itself, like the resulting legal document that’s created, but rather it’s the advice that you get from the attorney that is highly valuable. That’s one of the things we built into this product. We wanted to give you the information and the templates, too, so it’s like you have these templates but you also have an informed mind now and know how to customize those templates in a way that makes sense for your business. Then we say that the end check, or the way to make sure that you’re always good to go, is to have that client service agreement where you’ve used the Small Business Bodyguard template to start and then you’ve customized it a little bit for your business. If you are risk-averse and want to have that final check, you could bring it to a lawyer and ask, “Can you review this contract for me?” to get their final approval. For that, you’d probably be paying for about an hour of an attorney’s time instead of five to 10 hours for them to draft the agreement from scratch.

Meredith:  Right, and it’s less boring for the attorney, too, to review it versus…

Rachel:  Absolutely. We have a directory of attorneys in the back, attorneys that we know and that we feel would be a good fit for this audience. We’re not going to send you to an attorney who’s going to bill you $1,000 an hour, because they’re out there, but that’s not who’s in the back of this guide.

Meredith:  And that’s not who you necessarily need.

Rachel:  Exactly.  You don’t. Even larger businesses don’t necessarily need that. That has a lot to do with posturing and things like that. But the attorneys in the back pages have actually contacted me to say, “Thank you so much for including us. We love the clients that we get from Small Business Bodyguard. We love your templates.” And honestly, too, we’ve had peer review for everything that’s in there, so we’ve had three or four lawyers at this point working on our product. We make sure that what we’re putting out there is quality. You’re not going to go to this attorney and have them say that they need to start from scratch.

Meredith:  That’s really helpful because it scares me. I will say I don’t have an attorney on our team. The Small Business Bodyguard has helped a lot, though, because I was making all the stuff up. I was like, “I have Google. I can find a legal template.” As a customer of Small Business Bodyguard, I feel that I’m in good hands and have the resources I need to go forward. The directory is helpful, too, because if we ever do something bigger than what we’re doing, which we will, then bringing an attorney on staff is probably one of our next staffing considerations.

Small Business BodyguardGet your copy of Small Business Bodyguard here and make sure that you are legally covered!
– (affiliate link)

Jasper:  And the recommendations are always useful, because you never know who to go to from the phone directory. So, Rachel, what are some of the issues that small businesses miss that they really should be taking care of? What are the top ones? What is the #1 “gotcha” that gets people?

Rachel:  Well, let’s start at the beginning. There are several and we can cover a couple of them.

I would say the first is the business entity. A lot of people just go with an LLC (Limited Liability Company) because that’s what everyone does, or they don’t form anything and just remain sole proprietor or general partnership. Another mistake around that is they form their business in Delaware when that really doesn’t serve them at all, just because they’ve heard, “Oh, you should form in Delaware.” That’s a huge myth that bugs the crap out of me. We actually have a whole rant about that which we added in this update. Anyway, those are some of the mistakes people make just around their business entity that wind up costing them additional money and additional taxes, so that’s one of the first things we wanted to tackle in Small Business Bodyguard.

We let you know here’s what you should be thinking about when you’re forming an entity, and here’s why it’s so important because it will save you thousands in taxes. We have a customer who wrote to us to say, “Thank you so much! I’m so glad I made this investment!” After reading Small Business Bodyguard, she switched from an LLC to an S-Corp, and then went to her accountant who informed her that she saved $20,000 in taxes because she was in the right form for her business.

Jasper:  Indeed. We did exactly the same thing.

Rachel:  That’s probably the biggest or most common mistake. Everyone has to pay taxes no matter what business you’re in. And everybody needs the liability protection so that you’re not putting your personal assets at risk when you are going into business, because forming a business is risky. It doesn’t always wind up successful, so that’s an important step.

Meredith:  And related to that, especially for those of us who are married to people who aren’t in our business, getting that corporation set up and having it be really separate from your personal stuff is huge. It saves marriages.

Rachel:  Yes. I agree 100 percent.

Jasper:  Something else that comes up often, especially with a lot of the businesses we deal with, is intellectual property, because you’re creating content. There are a lot of issues related to copyright, especially when people are getting their images for their blog posts off Google and that kind of thing, and that can really bite them in the ass if they’re not careful. So tell us a bit about some of the things that people should be looking at in terms of intellectual property.

Rachel:  We focus on this at my firm and it’s incredibly important. I’d say that in probably 90% or more of every business, whether they’re a Fortune 500 company or a solopreneur, 90% of the assets of that business are intangible; in other words, they are intellectual property (IP). And most people don’t bother to register and protect that IP. One of the steps that people always miss is coming up with a name for their business without ever checking to see whether someone already owns the trademark for that name in the same industry. And that’s where you get hit with a “cease and desist” three years in and then find out you have to change the name of your business, which is not fun and very costly.

So  registering your trademark or brand element is one of the big things: the name of your business, your logo, your tag line, and the names of your key products you sell that make you the most money.  First, vet the name before you come up with it to make sure you’re not infringing on someone else’s trademark. Then go through the steps to protect your own brand. The same thing with content. We spend so much time creating content. Ninety-four percent of small businesses are doing content marketing, so we’re just creating new stuff constantly. Then there’s a lot of information products. E-learning has become a multibillion dollar industry, so we’re all creating content and very few of us are taking the important steps to protect that content and it’s stuff that makes you a lot of money.  So you have to register the copyright for the content that you’re creating as well, including blogs, your eBook, your e-Course… All of the various and different types of content that you’re creating should be registered with the U.S. Copyright Office.

Meredith:  Then there’s the nightmare scenario flip side of this, right? Which is that you check out the name and nobody else has the name and you’re all good, but then you don’t trademark it and someone else trademarks it.

Rachel:  Yes, and that is a very expensive process. We have so many different cases like that in our office right now where the business has been using the name for years. They take a long time to take the steps to protect it, and then when they finally get around to it there’s somebody else who’s already beaten them to it. There are  still things that can be done, but they’re not going to be cheap and you’re going to need an attorney to do it. So, being preventative is always incredibly cheaper than having to deal with the problem on the back end.

Jasper:  That’s right, because fairly recently there was a big case with the comedian Adam Carolla where there was a company that actually trolls the trademarks and then demands money to release it, and he got into a big public court case about it.

Rachel:  Yes, there are a lot of situations like that. There are fights brewing between Apple regarding their new “iWatch” and Swatch, the world’s largest watch company, which argues the iWatch is too similar to its “iSwatch”. Obviously, Swatch originally was stealing their “iSwatch” idea from Apple’s  iPhone and iPod, but there’s always something, and it’s very expensive. We’re not big corporations. We don’t have massive legal budgets that allow us to just tell a law firm, “Go deal with that for us.” You know what I mean? It’s something that as small business owners we’re dealing with ourselves, and it’s also the stress of having to deal with a lawsuit in your business. You don’t want to deal with it if you can avoid it.

Jasper:  Yes, that’s it, because most people are just going to give up at that point, aren’t they? They’re just going to say, “Okay, I can’t fight this. I’ll just close my business down and go get a job.”

Rachel:  A lot of people do that, which is terrible. I’ve seen several blog posts recently from people who have small businesses similar to ours, and they’ve had to change the name of content that they were creating or a product that they’ve created or the name of their business several years in. So it’s not like it’s going to happen on Day One. This occurs after you’ve gained lots of search engine optimization, you’re on the first page of Google, you’ve got a following, things are starting to really come together… Then you get hit with a “cease and desist” and have to change the name of your business, change your domain name, and all of the other things like your usernames on the different social media sites. It’s far reaching and can be incredibly costly, especially after all the time and money that you’ve spent on the marketing that you’ve built up by that point.

Meredith:  I think one of the things that stops people from even starting a business is that something like this might happen, which they don’t understand, and it’s going to throw everything into turmoil.

Rachel:  Right. I’ve actually heard that the top reason people don’t start their own businesses is health insurance, which is slowly changing in this country. But the second reason is the legal stuff. That’s one of the reasons why creating Small Business Bodyguard was so important and why I love doing what I do, because my true passion is helping people to get out of jobs they hate and get into jobs that they’re passionate about. Small Business Bodyguard helps them do that because it gets the legal stuff out of the way and takes away most of that fear and a lot of that risk so that they can take the leap into entrepreneurship.

Jasper:  I think that’s one of the things that’s so remarkable about how you’ve approached this, because, again, the legal language is something that is very off-putting to the vast majority of the population. But you’ve done it in such a way that you actually make it fun and interesting to read, which is quite a novel approach really, but it works so well. You want to read it.

Rachel:  Yes. I’ve had people tell us that they’ve read it all in 24 hours because it was so much fun and said things like, “That’s insane! This is a legal resource!” And that’s awesome!

Jasper:  I love the suggestion, too, of a glass of wine while you read it, which is probably a lot better than several cups of coffee.

Rachel:  Oh, yes, we’re always encouraging you to grab a glass of wine!

Small Business BodyguardGet your copy of Small Business Bodyguard here and make sure that you are legally covered!
– (affiliate link)

Rachel’s top tips for starting your business on a sound legal footing.

1) Form a proper business entity. Don’t operate a sole proprietor.

2) Do a thorough search on the name you are planning to call your business — first 10 pages of Google, Bing and Yahoo; Amazon, Yellow Pages, White Pages, etc., before you commit to a name.

3) Make sure you have a contract with every business or person you do business with — including your website visitors, which is your terms & conditions and privacy policy. It is to protect both parties, not hurt them.

4) Protect your intellectual property:  copyrights, patents, etc.

5) Don’t put your head in the sand with the legal stuff — manage it, deal with it.


Guest – Rachel Rodgers – Rachel Rodgers Law (affiliate link)

Rachel RodgersPrior to forming Rachel Rodgers Law Office, Rachel served as Judicial Law Clerk to the Honorable James A. Farber in New Jersey Superior Court. Rachel received her J.D. from Benjamin N. Cardozo School of Law in New York and has a Certificate in Alternative Dispute Resolution, also from Benjamin N. Cardozo School of Law. She’s been admitted to the Bar in both New York and New Jersey.

Before law school, Rachel worked for nonprofits in New York, at a premier lobbying firm in Washington, D.C., and on Capitol Hill in the Senate office of Hillary Rodham Clinton.
Rachel co-wrote the most entertaining business law guide for entrepreneurs that you’ll ever read called Small Business Bodyguard: Cover Your Bases, Cover Your Assets, Cover Your Ass. It has been called “fun and engaging” by New York Times bestselling author Chris Brogan and a “graduate-level course on how to build a strong foundation for your business” by CEO of OurDeal, Kyle Durand.

She’s been featured in and contributed to various media outlets and publications such as Fast Company, MSNBC, The Washington Post, Forbes Women, Amex Open Forum and others. Rachel is a member of the prestigious Young Entrepreneur Council (YEC) and serves on the Panel of Experts for the National Military Spouse Network. She also teaches and writes for the legal community about innovative law practice.

At home, Rachel can be found baking in the kitchen, running after her two-year-old daughter, feeding her infant son (because who knew such a small person could eat so much?!), hanging out with her hubby, or planning her next trip to France, her absolute favorite place on the face of the planet.

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