I’m new to business, what legal agreements do I need?
One of the most frequent types of emails that land in our inbox is from brand new creative small business owners who are feeling a little overwhelmed by all the legal steps to get a business up and running.
Often we’re asked, “I’m new to business, what legal agreements do I need?”
So today’s post will cover just that.
We’ll run through the agreements that are necessary for any new creative business venture, and the ones to consider down the road once you get to bringing on team members!
But before we even get into that, there’s an important section of this website that you should know about.
Today’s post will cover the general contracts every new business owner needs, though in certain industries there are a few other agreements that will be very important to your success and protecting your business.
We have created service-specific pages that give recommendations on what agreements are needed for your specific business type.
We’ll link these below. Just click the button that’s most relevant to your type of business for additional info on what’s needed specifically in your industry.
Legal template recommendations for…
Legal agreements every new creative business owner needs
A Client Agreement
Anytime you offer services to clients, it’s important you start the relationship by signing a client contract.
Many new business owners are afraid of scaring off their clients with a lengthy client agreement, but in truth, we’ve found that the most experienced business owners are the ones with the most thorough contracts.
Not to mention starting the relationship with a strong contract exudes professionalism and makes it clear to the client that you’re someone who treats your business seriously as a business, instead of simply some hobby activity.
We often see new creative business owners in Facebook groups crowdsourcing opinions on how to handle tricky situations with clients that have spiraled out of control. We can say confidently that in just about every situation, a strong contract like our industry-specific client agreements would have saved them.
A client agreement is a contract between you and your client that spells out items such as;
Which package has been chosen, what’s included, and what the deliverables are
How many rounds of revisions are included
Duration (dates) of the agreement
Fees of the service package chosen
Methods of payment accepted and payment terms (initial payment, retainer/deposit, final payment, etc.)
What happens in the situation of a late payment
Policies on refunds
How cancellations or terminations of the agreement would be handled, and policy on an early termination fee
The type of relationship of the parties (ie. independent contractor, vs an employee)
What materials and access you, the business owner, need from the client to perform your duties, and by when
A statement that the client accepts if they send deliverables/site content late, the project completion may be late as well
Who owns the intellectual property and copyright rights after the contractor’s work is completed
An agreement that both parties have the ability to share photos of the work for marketing and advertising purposes
Creative license for you the business owner to perform your services with your specialized skill and talent
If you, the business owner, may be engaged in serving other clients at the same time as the client’s project
How cancellations, terminations, and breaches of the agreement would be handled
What happens if you, the business owner, are incapacitated and unable to perform the services
Standard legal clauses, including: Representations and warranties, confidentiality, limit of liability, dispute resolution, amendments, compliance with law, waiver, assumption of risk, indemnification, merger, and force majeure
As you can tell from that list, there’s a lot that goes into a client agreement, and those are just the standard terms.
We also have customized client agreements for a variety of creative industries and those client agreements also cover specific issues that are likely to arise in that industry, (ie. if you’re a web designer and the client doesn’t get you their photos & images on time for your project start date, or if you’re a calligrapher and the envelopes get lost in the mail, etc.)
Click the button below to browse all our creative-industry-specific client agreements!
Additional Client Agreements
Some industries also require a few extra agreements to fully protect you and your clients. Here are a few examples of when these additional client agreements may be needed.
additional agreement for graphic designers:
Let’s say you’re a Graphic Designer and you’ve just finished up a full branding package for a client, and they’d also like to keep you on retainer monthly so you can create additional brand items for them as the need arises.
A Graphic Design Client Agreement would have been appropriate for the first project (a one-off brand design) however a Retainer Agreement would be the appropriate option for the long-term retainer relationship.
additional agreement for calligraphers & stationers:
Similarly, Calligraphers & Stationers also often need a secondary client agreement for when their clients wish to use their creation beyond the original scope of the project.
Say you created some work for a client, and they love it so much they also want to print it on mugs, t-shirts, notebooks, and more! That’s a situation where you’d want to sign an Extended Licensing Agreement with your client.
additional agreements for photographers & videographers:
And lastly, Photographers and Videographers often need the greatest number of additional agreements, thankfully, they’re all fairly budget-friendly.
A Print Release is something your clients will really appreciate. This simple document is great to send to your clients as a courtesy so that they may print your photos from their events. This document will maintain your copyright ownership over the photos while allowing them to print as many copies as they need.
(Funny story: I had to put this template to the test this past December when I was that person trying to print out their Christmas cards at the last minute. The printing shop I was at visited could tell I was using professional photographs but apparently was able to guess that I wasn’t the professional photographer (they were right). I had to quickly print out this Print Release to use… and in that moment I realized it’s just as handy to have on me, as it is for the client!)
And what happens if you find one of your images floating around social media, with no credit back to you? That’s where the Social Media Cease & Desist comes in handy.
Legal Template Recommendation:
The Legal Foundations e-book
For new business owners, we highly recommend our Legal Foundations e-Book. It’s packed full of legal advice directly from our shop attorney Paige Hulse. Think of it as a sit down with an attorney on how to legally set up your business from the very start - except a lot more affordable.
The Legal Foundation e-Book covers the following topics:
How do you name your business?
What are EINs, and when do you need them?
Everything you need to know about DBAs, LLCs, and whether or not you need to be an S-Corp
Permits, licensing, and insurance
How to keep your website legal
What contracts you need, and what needs to be in them
Trademarks and Copyrights 101
And more!
It’s an invaluable resource for new creative business owners which will give you the confidence you need to make your legal decisions wisely when starting up your new business.
Legal Template Recommendation:
An LLC Operating Agreement
A limited liability company (LLC) is a business entity that provides enhanced liability protection for the business owner, and the tax benefit of a partnership. Above all, there is one specific reason why an LLC is the most popular business entity for creatives: an LLC separates your personal assets from your business assets.
We always, always, always recommend new business owners start an LLC for their business for this reason.
What does separating liability mean exactly? We’ll share an example to demonstrate.
Say you are a florist and set up a booth one afternoon at your local farmer’s market. It’s a great success, and you have a flood of customers. Things are going swimmingly, until all of a sudden, one customer trips over something in your booth, and twists her ankle.
She ends up going to the doctor and bringing claims against you to recoup her medical bills, saying that you created an unsafe environment. You obviously did nothing intentionally to injure her, so why do you need an LLC?
If we think about the worst-case example and your insurance does not cover this customer’s claims, and you don’t have an LLC, your car or your house could be used to help pay damages.
If you have an LLC, the claimant can only use your LLC assets to pay the damages, they can’t get at your personal assets, like your house or car.
Hopefully, we’ve demonstrated the importance here of separating your business and personal assets.
And remember, in order to do so, you need to set up an LLC.
How do you do that?
three steps to forming your LLC:
Step 1: Filing your articles of organization with your state
Step 2: Opening your business bank account
Step 3: Draft an operating agreement.
Steps 1 & 2 are something business owners may do themselves, you don’t require a lawyer to help with them.
Step 3 is where we can help. For drafting an Operating Agreement it’s important you have this written by a qualified attorney. Our shop attorney Paige Hulse has drafted 2 Operating Agreements which you may find in our online shop.
First is the Single Person LLC Operating Agreement or the Multi Member LLC Operating Agreement.
You would need one (not both) of these operating agreements, and most businesses lean towards the single-person LLC.
If you’re the only member of your LLC, you’ll need the Single Person Operating Agreement. If there are multiple members, you’ll need the Multi Member Operating Agreement.
Contracts mentioned:
Legal Template Recommendation:
Website legality
There are 2 vital contracts to have in place to ensure you’re operating your website legally (plus a third if you’re making sales through your website!)
Contract #1: A Privacy Policy
If you’re collecting any information on your site users, you must have a privacy policy. “Must” meaning it’s federal law. Additionally, the newly-mandated California Consumer Privacy Act and GDPR laws also require you to have a privacy policy anywhere you’re collecting “personal data”.
The most common legal issue we see with creative business owners is the violation of federal law by failing to include a privacy policy on their website.
Wondering if you’re collecting personal data? You are and need a privacy policy if you do any of the following:
Have Google Analytics or another analytics tracking software installed
Collect email addresses via a newsletter or opt-in gifts or lead magnets
Make sales on your site (digital & physical products, services, gift cards, etc.)
If you’re doing any of the above, you must have the foundational level of protection via a Privacy Policy.
*(Pssst - We might be biased, but we highly recommend you purchase your Privacy Policy from our shop.)
Privacy laws change frequently, countries and states are coming out with new ones all the time, meaning your Privacy Policy needs to be updated fairly frequently. With all our templates, you’re guaranteed lifetime updates, meaning if you get your Privacy Policy from us, you won’t be left with an out-of-date policy and need to repurchase a new one in a few months.)*
Contract #2: Website Terms & Conditions
Terms and Conditions are one of the foundational elements of your website- it’s a contract between you and the user of your site. While not a federal requirement, we make sure all of our clients have Terms and Conditions on their websites. If you don’t have a website Terms & Conditions (the agreement that governs how your website visitors may and may not use your website) you’re leaving your site content wide open to copycats to have a field day.
A Website Terms & Conditions policy is your best line of defense against copycats and other common website issues.
Contract #3: Terms & Conditions of Online Sale
This Terms & Conditions of Online Sale covers very different topics than the above-mentioned, more general Website Terms & Conditions. The Terms & Conditions of online sale is a separate document that customers must agree to before purchasing a product, which will lay out topics such as your return policy, risk of loss provisions, all disclaimed and implied warranties, and more.
Having a detailed Terms of Purchase (aka Terms of Sale) is vital for any online shop. Having this drafted by a contract-specialized attorney is so vital because if certain provisions in your Terms of Sale are left out or improperly drafted, and one of your items is broken, lost, or stolen during its transit, you could be left in the awkward situation of having to fight that with your client over who has to pay for what.
Optional: Purchase all 3 together in the Online Shop Bundle
If you’re in need of all 3 contracts mentioned above, we also have a bundle option where you may purchase all 3 together and save in the process with special bundle pricing.
Contracts mentioned:
Legal Template Recommendation:
hiring agreements
Hiring tends to be something business owners get into a few months or years into their business, but we thought we’d mention it now as you’re getting started to give you advanced notice that this will be necessary when you get to the point you’re ready to bring on your first team member.
Shop Product #1: Legal Foundations of Hiring e-Book.
It gives you a solid understanding and groundwork on the topic of hiring, so you can go into the Hiring process confident you’re conducting your first hire legally.
The e-Book covers the following topics:
The difference between an employee and an independent contractor; why you need to care and how you can know the difference
Everything you need to know about hiring an intern: paid, unpaid, or externship
How to (legally) hire a VA, and scary scenarios to protect yourself from
Proprietary information concerns in the hiring process
When to bring in an Online Business Manager (OBM) and strategists
And last but not least - an overview of what our shop attorney wants you to know before you bring on an employee
And more
Contract #2: An Employment Agreement or an Independent Contractor Agreement
Which hiring agreement you’ll need will depend on if you’re bringing on a full-fledged employee or an independent contractor. (Don’t know which way you should hire? Pick up a copy of the Legal Foundations of Hiring e-Book mentioned above and you’ll know.)
Hiring is one of the areas we most highly recommend you either purchase an attorney-drafted agreement or work directly with an attorney hourly to ensure you’re doing your hiring legally.
Why? Employment law is riddled with laws that most people don’t know exist when they’re writing the contracts themselves, and you could find yourself in hot water with the Internal Revenue Service (IRS) and Department of Labor (DOL) if you decide to risk it.
Contract #3: A Non-Disclosure Agreement
A Non-disclosure agreement (NDA) will ensure that the new team member you’re working with will keep your confidential information secret. An NDA prevents your new team member from sharing your new business idea and swiping it for themselves. An NDA will ensure that your new hire is legally required not to share your idea, or face a hefty financial penalty if they do.
shop products mentioned:
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