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Copyright. Intellectual property. GDPR. Infringement. LLC. Sole Proprietorship.
Either your eyes just glazed over, or your heart rate sped up as you read those words, we know.
Legal terms tend to either make you zone out, or want to hide, but when you’re a CEO it’s important that you know and understand these common legal terms.
The good news? We created a quick guide to give you the legal terms and easy-to-understand definitions so that you can feel empowered instead of uncomfortable the next time you see those words.
Articles of Incorporation: The official legal documents that creates your corporation. It’s typically a simple one-page summary of the date your company was formed, and what kind of company it is (example: LLC, C-Corp, LLP, etc.), issued by your state government.
Contract: A legally binding agreement between two or more parties to exchange something of value (ex: providing services in exchange for payment).
Contract Template: A boilerplate or standard contract for you to use when hiring contractors, selling services or products, entering into a business relationship, etc. A template can save you time and money while protecting your legal rights.
Copyright: The right to display and use a work such as a photograph, your videos, blog post, graphics, email copy, etc., or assign that right to others. Looking for a more in-depth look at copyrights? This blog post is for you!
DBA: A “doing business as” name you can use for your business instead of your personal name. It is a nearly irrelevant concept that was necessary before LLCs existed. It was meant to create transparency so that people could no longer hide assets in faceless C-Corporations prior to the invention of LLCs. Is a DBA right for your business?
EIN: An Employer Identification Number, a nine digit number assigned to legal entities that have employees or are required to report taxable income. This is like the social security number for your business. Learn how to set up your business’ EIN.
GDPR: The General Data Protection Regulation is a data privacy regulation that took effect May 25, 2018 and applies to the European Union but has implications for every company doing business anywhere in the world. Here’s what you need to know about GDPR.
Independent Contractor: A person who performs services on a limited basis, such as photography, graphic design, business management and organization, etc. A contractor is not an employee and therefore, contractors are free to work with any client they’d like in any manner they’d like, as long as the work gets done. These are sometimes called a 1099 Contractor instead because of the US tax form they must return to anyone who has hired them throughout the year.
Intellectual Property: An intangible asset (like a copyright, patent or trademark) that has monetary value. These often protect your investment of time and money in developing a brand, invention or content so that these things cannot be easily stolen and used by others.
Joint Venture: An arrangement between two or more parties to work together in which each party contributes money, property, labor or service. Interested in joint ventures? Start here.
Liability Waiver: A form that indemnifies or holds harmless a party from liability, ex: when someone attends your event, they might sign a liability wave to protect you as a business owner from getting sued for small things you can’t really help like a hotel that undercooks the food you had catered at the event.
Licensing: Authorization given by the owner of an intellectual property (a copyright, patent, trademark) to use that property. Think of this like a “lease” to rent intellectual property, much like you’d rent a house to live in for a period of time.
Limited Liability Company (LLC): A business structure that shields its owner(s) from personal liability. This can protect business owners from having their personal assets and property seized if their business gets sued or must declare bankruptcy.
Non-Compete Agreement: An agreement between, typically, an employer and employee. It controls who workers can engage in work with during or following employment. Should you use a non-compete?
Non-Disclosure Agreement (NDA): An agreement that limits what information can be shared about an idea or business. NDAs are useful if you’re doing something proprietary and need to protect it from theft, or if you are considering hiring someone but in order to see if they’re a good fit, you have to describe secret information to them prior to bringing them on board.
Operating Agreement: The document outlining the structure of your LLC, how it’ll operate, and who’s responsible for what.
S-Corp: A tax designation that may allow a corporation to avoid double taxation.
Service Agreement: A document outlining the agreement between someone who provides services, like a graphic designer or virtual assistant, and their clients. Do you need a master service agreement?
Sole Proprietorship: This is a business structure with no separation between the owner and the business. All profits are reported on the owner’s personal 1040 tax return.
Terms & Conditions: A document outlining the conditions of use of a website and/or product purchased from a website. Often, it lays out exactly how users can and can’t behave on your site or with your products, what you’ll do if visitors break those rules, and – conveniently – it’s where you wash your little legal hands of liability. It’s also where you protect your intellectual property, trademarks, and all the other things lawyers like to get uppity about.
Basically? It’s really important, so make sure you’ve got your Terms & Conditions set up on your website!
Trademark: Your business name, your unique tagline, any catchy phrases that you always use that are unique to your business, your business logo(s), or anything else that is intrinsic to your brand identity or makes you stand out from the rest of the crowd. Do you need to trademark or copyright your work?
Work for Hire: Work performed where the hiring party, and not the author, holds all rights to the work product created.
TLDR? There’s a whole bunch of legal terms in this post, and it’s worth bookmarking so that you can come back to it the next time you need a simple definition of a scary legal word.
And if all of those definitions still felt like a lot to you? Grab our Lawless to Flawless course. It will give you a framework for legally starting your business - specifically created to help you when your brain is exhausted from all of the other parts of running a business.
Don’t let the fear of making a wrong move legally keep you from building your dream in 7 days or less!
Are there any other common legal terms that you'd love defined in plain speak? Let us know in the comments!
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