Doing an Annual Legal Review for Your Small Business – Transcript

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[Intro Music]
I love you, but I’m not your lawyer. This is for your educational purposes only and does not constitute legal advice. You should not act, or refrain from acting, on the basis of this content without first consulting a lawyer.

Welcome back to another episode of Office Talk. I often talk about the importance of doing some sort of annual review of your legal situation in your business. But I’ve never really gone into what are some of the questions you need to be asking yourself during this time. Now at the time of this recording we are about to wrap up the year and the end of the year is always a great time to do some sort of business review or legal review. But you can really do this at any point in your business. The key is really just to do it consistently.

So the first thing I want you to do is set a date with yourself. Open up your calendar right now, set a date to do this and make it a reoccurring event. Okay, you can go do that now. I’ll wait. Seriously. I’m waiting. Did you do it? 

Okay, so first up disclaimer. I don’t know what kind of business you’re running. Obviously. I don’t have the benefit of talking to you. You could be a service based business. You could be a product-based business. Maybe you’re a technology startup. Maybe you are just starting
and it’s just you. Maybe you have 10 employees. Obviously, this is not going to be an all-encompassing type of list, but it’s going to give you the categories, the flavors of some of the issues that you need to be thinking about and then deciding for yourself, is it applicable or not? Do I need to pursue this a little bit further by contacting a lawyer in my area or who has the subject matter expertise to advise me further? 

In preparing for this episode. I wanted to create a framework for you that would be really easy for you to think about these topics. And honestly, I was like, I’ve already created this framework. It’s my legal burrito. And if you don’t know what I’m talking about make a note to go back and listen to episode 95 or you can go to my website and on my website. I have a section where I talk about the five legal ingredients that are really important for you to be thinking about in your business.

But essentially I’m not going to go through all the details but essentially it breaks down into (1) foundational issues, (2) contracts, (3) your online communications, (4) the people part of your business, and (5) then finally your creative content – your trademarks your copyrights.

So first up are the foundational issues. These are all the things related to your entity. Your setting up of your business: making sure you have the right permits and licenses in place.

So when you’re doing your annual review you want to revisit: is my current entity structure working for me? A lot of people will start off their business perhaps as a sole proprietorship until they really get that business momentum going and then can justify either the cost or the need of registering either as an LLC or a corporation. Normally people might just pick one entity structure and stick with it through the life of their business. But this is a good time to check in to see if your current entity structure is working for you. Also something to be thinking about a lot of people you guys move around. You might start a business in I don’t know Wyoming and you set up your LLC there and then now you’re living in Texas. So you might want to think about does it make sense for me to continue having my business running as a Wyoming LLC. Should I dissolve that and maybe register it here in Texas? Not register, but establish an LLC here in Texas? And also if you decide no, I like being a Wyoming LLC operating in Texas. just also make sure you’ve done what you need to do to register your business in Texas. Make sure that you’re running your business, for example, in that new state with the right documentation in place and the right permissions. Is there any paperwork that needs to be filed? Are there any taxes that need to be paid?  Get all of that stuff, if you don’t already have them, please get them on calendar. Don’t wait for the state to send you a notice to do that. These are things like if you have an annual franchise tax, if you have to report your sales tax and pay your sales tax to the state every year things like that get them in your calendar and set the due date out like 30 days before it’s due. So you have plenty of time to gather whatever it is you need to in order to report that or to pay that fee.

Under foundational issues we also talk a lot about doing your fictitious business name application or your DBAs. If you had to file one of those know that sometimes those have expiration dates. So here in California every few years you do need to renew that filing.
And so again keep track of that deadline and make sure that you timely file any kind of renewal or follow-up paperwork.

You want to evaluate has your business evolved in the sense of are you offering new products or new services? For example, let’s say you’re a photographer. And when you first started out, you would provide photography services. You would just go out and do the shoot and then you know, just sell these digital photos to your client. But then since then you’ve decided: well, I want also sell albums and I want to create new products physical products like canvas prints or whatnot and I want to add that as part of my services. Well, that’s a new tangible good. If you sell a tangible good you have to collect sales tax and then you have to report and pay that sales tax back to the state. So it’s those types of things you want to be looking out for as well. 

What has shifted from day one or from you know, the last time I did this review and could that really implicate any type of legal or financial or tax consequence that I need to be aware of. Hopefully you’re doing this analysis before you make the change, but I know how sometimes we can get really caught up with great ideas, and we just want to execute on the idea and get going and sometimes the legal and financial analysis of it comes afterwards.

This is why doing a review like this is so beneficial is that you’re hoping to catch some of those things you might have missed along the way.

Permits and licenses. You want to think about are there any new ones I need based on any changes that have happened in my business? Are there any renewals that are coming due? Do I need to resubmit? Do I need to reapply in my jurisdiction for such permits and licenses?

Next up is insurance. Do you need insurance? Do you have insurance? Are the policies you have enough for you? Do you need to scale it back? Do need new insurance to cover you because the scope of your business has changed? Take another look at that before the year goes by.

On a side note, I know we’re talking mostly about a legal review, but I also think doing a like an expense review is also really helpful. Especially when it comes to these subscriptions and renewals and memberships both in your personal and in your business life. Because I think there’s a lot of fat that we could cut – financial fat – that we could cut that we miss because we’re not keeping a close eye on things. 

So for example, I use Asana as my project management tool and I have a project there called subscriptions and renewals. And I break it down by month. So there’s a section for January, February, March, April, all the way through December. And if there is an annual subscription, that is due let’s say in March. I put it under the March section,obviously.  And I calendar that out about at least 15 to 30 days before that bill is due so that I’m aware that this is coming up.

So for example in March, my Kajabi bill is due and it’s pretty hefty because it’s for the full year. And so what it allows me to do is a) be prepared to see that really big charge coming out of my accounts. But also more importantly it allows me to re-evaluate whether I think it’s important. It gives me more than enough time to either cancel it, to downgrade it, to maybe change the provider. So if I’ve been using a certain software and I’m like, ah, I really don’t want to use them anymore for another year. I think there are better tools out there. It gives me more than enough time to do that. 

So I’m really big on calendaring and keeping track of these details. So whether they are financial expenses, they’re your taxes that are due every year, they are renewals or filings that need to happen on a regular basis I always put them in a calendar. I put it in my project management software. I calendar the date. Let’s say 30 days before or however much time I think I need to prepare for that. So something really, really basic but just paying attention to this kind of detail has really allowed me to run a pretty lean business.

So those are the foundational issues, questions you need to be thinking about. They’re obviously going to be more depending on your type of business, but hopefully this gives you a good jumping-off point to start digging into your business and questioning and reviewing things to make sure that it is working for you at this point in time.

Next up are your contracts! Now, hopefully if you’re listening to me, hopefully you have already gotten yourself some really solid contracts for your business. And if you haven’t,  definitely work on that. That should be your number one goal out of all of this is to get the solid contracts prepared for your business. And if you don’t know which ones to get you can take the quiz on the home page over at and it will give you a kind of customized listing of the potential contracts you might need, and as well as there are a whole bunch of blog posts and podcast episodes and things that will break it down for you so you can get an idea of the lay of the land.

I’m going to assume you do have contracts in your business. So on a cursory level you want to think about do I have all the contracts that I need? And again, you can go to the website to check out some of the resources of the different categories of contracts you might need. If you are a current customer there is probably going to be a lesson inside your product that talks about other potential contracts you need. And so it’ll give you kind of a lay of the land a cursory overview.

But I’m just going to assume we’re going to be talking about a service based contract.

And I like to break this process of reviewing and revising your contracts into three steps.

So the first step is to reflect. The second one is to resolve. And then the final step is to revise. So in the first step of reflecting we want to think about where have we been? Where has our business been over the last year or period of time? And what kind of a business do you – you – not your best friend. Not that girl over on Instagram. But what kind of a business do you want? Do you want to be working with certain types of clients? Do you want to be offering only certain types of services or products? Are you tired of providing certain types of services or products that you just don’t want to do anymore?

So take the time to think of what kind of business you want to run. And then I want you to think about –  are there any past experiences you’ve had with clients or maybe ones that you’ve heard from other friends that have happened to them that you want to avoid? Any that you want to see happening more often? So just really take that moment to reflect.

So for example, let’s say you’re just so tired of chasing down payment for work that’s already been delivered. So you do all this work and you send an invoice to a client, you send them the work and then you find yourself constantly having to chase them down to get that final invoice paid. Who wants to be in the business of chasing people down for payment? Not me. I want to actually work on the next project, the next client work. So maybe what you think to do is okay moving forward- I’m not going to be delivering or handing off any final work until I’ve received the final payment. So final payment comes first and only then do I send out the final work.

Now realize I always say that contracts are an evolving process. Every time you have a client experience that’s an opportunity for you to perfect your policies and procedures. And I say perfect in the sense of what’s perfect for you in your business. 

Once we’ve reflected we’re going to move on to step two, which is resolving. Taking all of that information, all those experiences, we’re going to come up with some potentially new policies and procedures.

Using that example from before, maybe the new policy is going to be – I get paid up front before I start anything any work or maybe you get paid half of it up front and half of it before you deliver the work to the client. You can figure that out for yourself. It’s going to be a obviously very personal decision and unique to your business.

Then finally we are going to revise. This is the moment of truth. This is where we’re going to take any changes that you have decided to make and we’re going to address them in your contracts. If making these revisions to your contract feels very intimidating, it feels overwhelming and you don’t much rather spend your time doing other things in your business. Then this is the time that you might want to reach out to a lawyer to have them make these revisions for you. Or to even review the contract for you and to spend that time kind of working through these questions and these issues together.

So that’s the stuff with contracts. One, you want to make sure you have all of the contracts you need and then take a look at the contracts you do have and make sure that they really reflect where you are currently in your business and then account for any potential issues or pitfalls that you’ve come across in the past.

So this just talked about our service agreements, but if you have any vendor contracts or independent contractor contracts, you want to take a look at those as well. Any type of contract that you have in your business, I think it behooves you to take a close look at them at a minimum year-over-year to make sure that they reflect your current business.

The next category is your online communication. So this is going to encompass things like your privacy policy, your terms of service. That stuff, you know, we tend to set it and forget it. We tend to just want to put it at the bottom of our website and the footer with the links and never look at it again. No, these are like your contracts. We want to take a look.

Is it really reflecting our current policies? Our current data practices or data collection efforts? Remember the purpose of a privacy policy for example is to communicate to website visitors what data is being collected and how that data is being used. So if your data collection practices have changed your privacy policy needs to reflect that. 

The next category is people and hiring. Now it’s going to come to a certain point where you’re going to hire somebody in your business. And if you don’t have any plans to hire anybody, then you can skip this step. But most of us will, whether they are contractors, whether they’re employees, whether they’re interns or some other categorization of worker. You want to ask yourself have there been any changes in the law that I need to be aware of?

For example here in California, there’s been some pretty big changes in the way we are classifying independent contractors and employees. We just did an episode about that  – episode 102. So if you hire people in California, or if you’re a business based in California, I would really recommend that you listen to that episode.

Think about what are going to be your employment needs in the coming year. For example, are you planning to do a big website overhaul? Are you going to need to hire some website designers? Are you ready to hire your first employee? Or are you going to launch a new internship program? And you want to have all of those ducks in a row.

It’s really important to do your research ahead of time, especially when you’re hiring employees because there’s a lot of stuff that just needs to be in place before you hire your first employee and spending that time upfront doing that making sure your I’s are dotted your T’s are crossed is going to be helpful for you because you’re going to avoid being in a situation where you’re like, oh my gosh. I really need the help. I’m super stressed out and there’s all this like legal stuff I need to take care of on top of it. It just adds to the pressure.

So at least get that education, get your ducks in a row so that when you are ready to hire that perfect person, that next employee you’re ready to go. If you currently have employees, then you definitely want to check in with a labor and employment lawyer just to make sure that things have been done properly. There haven’t been any changes in the law that you need to be aware of and need to be complying with.

And finally your copyrights, your trademarks, your content. I can go on and on about this. And in fact, I have tons of episodes explaining to you what copyrights are, what trademarks are, and the nuances of all of it. At this point. I want you to assess: Is there any content that I need to protect? Whether it’s the right decision is to register the copyright? To register the trademark? Just deciding is there any IP – intellectual property-  here that needs that extra level of protection and therefore requires registration?

If you have already done this you want to make sure that any renewal dates are calendared. So for example, if you have already registered a trademark, you do need to renew that trademark every five to ten years. So there’s an anniversary between the 5th and 6th year of registration and then another one at ten years. So make sure those dates are calendared.

And remember with trademarks, you can only have a registered trademark if you’re currently using the mark. So sometimes what happens is people will register a mark, they’ll get it and then they stop offering that service or they stop selling that good for example. So you’re not going to be able, in most situations, to re-register that if you’re not using the mark. 

If you own a registered mark, you also have a duty to really defend that mark against infringement. So if you have seen other people using your mark without permission or infringing on it – take the steps that you need to take in order to defend and protect your mark.

If you have the need in the coming year to utilize other people’s content, so for example, maybe you’re going to launch an advertising campaign and you want to bring in a new photographer to style and shoot that campaign. What are your needs and what are the terms of use going to be for that content? So this is where essentially you’re trying to get the permission necessary for you to use somebody else’s protected content for your needs.  And we do this usually through something called a license or a licensing terms in a contract.

If this is a big part of your business, you might want to review your licensing agreements and you could be the one who is getting the permission or you could be the one giving the permission. If you have any type of licensing deals or licensing agreements, it’s a good time to review them to make sure that you are still in compliance with
those terms. If the licensing terms are going to expire, you might want to reach out and see if you can renegotiate or extend the licensing terms for a further period of time.

There you go. I hope this gave you a really good framework in which to think about some of these legal issues that we want to revisit on a regular basis. Now again, this isn’t going to be an all-encompassing list. The key really here and the point I really want to drive home is to just even set the time for yourself to do this. Whether you do it once a year, every six months, whether you do it in December, or do it in June – it doesn’t really matter. I want you to set that date with yourself, and hopefully with the counsel and advice of a lawyer who understands your business to go through these issues and address any changes or evolutions both in your business. and in the law. 

With that said, I hope you have a fantastic day. And I can’t wait to talk to you next time.

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