How do you define what a creative business is? When I talk about creative business owners, I mean someone who creates something on behalf of someone else. This could be a photographer, copywriter, content creator, etc. And like all entrepreneurs, they have legal areas to take into consideration too.
In today’s episode, I cover the legal side of business structure, protecting your website, working with clients, content ownership, and more.
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In this episode:
[02:32] – Are creative businesses better off as limited liability companies or sole proprietorships?
[05:25] – Danielle discusses terms and conditions and disclaimers for creative business owners.
[06:40] – Focus on these areas in your client agreement to ensure it has a solid foundation and will help protect your creative business.
[07:39] – As a creative, you need to set some boundaries in place for your clients regarding content creation.
[08:35] – Many creative businesses have master service agreements. What are they, and how do they make things easier for you?
[09:21] – Danielle explores a vital legal area for creatives: copyright protection for your original works and how to wrangle content ownership provisions.
[11:02] – Be aware of these three key terms in your client agreement regarding content creation.
[12:13] – What else can you do to protect the creative business and brand you’ve built? Danielle talks about trademarks.
[13:05] – What should you do to protect your digital products?
[13:58] – Keep these things in mind as you hire more people to help you handle increased workloads in your creative business.
[15:04] – Danielle wraps up the episode with your action steps for today.
Links & Resources:
- Creative Business Owners Legal Guide
- Episode 31: “Website Accessibility”
- Episode 13: “Content Ownership in Contracts”
- Liss Legal
Welcome to the Simplifying Legal podcast, brought to you by Businessese. I’m your host, Danielle Liss.
Many years ago, someone told me I was the least lawyer-y lawyer she’d ever met because I helped make legal easier to understand. To this day, it’s one of the best compliments I’ve received in my professional life.
If you've ever felt legal was too scary, too overwhelming, too complicated, or just plain incomprehensible, you're not alone. The Simplifying Legal podcast was created to help.
In each episode, we’ll do a deep dive into a legal topic and give you concrete next steps so you can apply it to your business.
My goal is for you to walk away from each episode thinking, oh, that was easier than I thought it would be.
Let’s get started.
Hey there, I’m Danielle. Welcome to episode 35 of Simplifying Legal for Small Business Owners. Today’s episode covers legal for creative business owners.
Disclaimer: As always, before we get into today’s topic, a quick disclaimer. This podcast is meant to provide you with legal information only. It’s not legal advice and does not create any type of attorney-client relationship between us. Please don’t take any action without consulting your lawyer first.
First, let’s discuss who this episode is meant for. When I define creative businesses, it’s typically someone who is creating something on behalf of someone else. This can encompass photographers, stylists, content creators, copywriters, and so much more.
At Businessese, our products are often focused on creative service business providers, like content creators, copywriters, and designers. This episode will more heavily focus on the legal areas for these businesses. However, if you have a different type of business, a lot of this episode will still apply to you. We’ll cover business structure, protecting your website, working with clients, content ownership, and more.
Like the other episodes in this series, there’s a lot of information and a lot of resources to tag. To make things easier, I created a PDF with some general information on each category, as well as a list of resources that you can consult. You can download the resource guide at Businessese.com/creativelegalguide.
Okay, now let’s talk about legal for creative businesses.
Starting Your Business
Let’s start by looking at starting your business.
Starting a business is exciting, but if you are more interested in creating, it can also feel overwhelming as there are so many administrative things to do. From figuring out your service packages to finding clients, your to-do list can seem endless.
On the legal side, you may be considering whether you should form an LLC, which is a limited liability company, or move forward as a sole proprietor.
When you’re a sole proprietor, it usually doesn’t require a lot of paperwork, other than possibly obtaining a business license. As a sole prop, you and your business are considered the same entity. This is easy, but it could expose you to the possibility of personal liability in the event that something goes wrong.
For those who want to avoid exposure to potential personal liability, an LLC may be a great option. But, it is something to consider carefully since it requires more effort and expense than having a sole proprietorship.
To form an LLC, you have to file official paperwork, typically Articles of Organization with your secretary of state’s office. Your Articles will also name a registered agent, which is someone who can accept service of process if your business is served in a legal action. You should also have an operating agreement for your LLC, which is the document that governs the business. This is especially important if you have more than one person starting the business.
After the LLC is formed, you’ll need to be careful to keep your personal assets separate from those of the LLC. Since the LLC is a separate entity from you personally, unlike a sole proprietorship, it’s important that you treat it like a distinct and separate entity, or you could reopen the door to the potential for personal liability in the event something happens.
Protecting Your Website
Next, I want to talk about your website. If you have a website, it’s important to make sure that you’ve considered the legal side of your site. Typically there are a few legal policies you should include:
Terms & Conditions
The next important policy is terms and conditions. Your terms and conditions are your contract with your audience on how they can use your site. Often, these terms will include things your audience can do with your content, things they can’t do, intellectual property notices, licenses regarding user-submitted content, and other legal terms.
The next policy you may want to consider to protect your site is a disclaimer. It’s there to protect the business from liability for use of the information you publish. For example, if you are in business as a conversion copywriter, your website may include blog posts on improving conversions. Here you’d want a disclaimer to show that the content is meant to be informational and state that you can’t guarantee results.
The last policy that you may want to include is an accessibility statement to show your commitment to providing an accessible website. Check out episode 31 for more information.
Working with Clients
For creative businesses who offer services, your client relationships are the foundation of your business and you need a strong client agreement.
The goal of your client agreement is to protect your business and to ensure that your clients understand exactly what to expect in the relationship.
Here are a few of the areas I recommend addressing in your client agreement for creative business owners:
- First, and most importantly, your agreement should have a detailed and specific scope of work that describes the services you’ll perform for your client. Here, you can talk about deliverables, timelines, and cover all of the details.
- Next, make sure that your agreement explains how your compensation works. How much and when are you being paid.
- Next, what happens if either you or your client wants to end the agreement? It’s important to have a termination clause that discusses this.
- Next, as a creative, you are creating some type of content for your clients and your agreement should cover this. I’m going to talk more about content ownership in a minute since it is such a vital part of your agreement.
- Next, your agreement can be used to manage drafts with your clients. Be specific about how long you expect it to take for your clients to review drafts. Also, very important, make sure that you’re clear about how many drafts will be provided for the price being paid. If it’s a set amount, you can typically give an hourly rate or set price for additional drafts to ensure you don’t deal with scope creep.
- And finally, use your agreement to set boundaries with your clients. If you don’t plan to respond to things in an hour, make sure they know how to reach you and what your response times typically look like.
If your services change, do a review of your client agreement to see if you need to make any updates for the new services.
As your business grows, if you have a lot of repeat business from the same clients for different projects, it may be time to move from a simple client agreement that covers just one project to a master service agreement, which will allow for you to add a new statement of work for each new project. This is extremely common in creative businesses and creative agencies.
An MSA can make project and contract management so much easier. If you are still using a basic client agreement, but you are doing this type of work for repeat clients, talk to your lawyer to see if an MSA will make sense for your business. I’ve worked with a number of legal clients in transitioning to MSAs and they are thrilled with how much easier things are once the MSA is set up.
As I mentioned earlier, your client agreement should address content ownership. For example, as a photographer, you may need to ensure that you have the appropriate license in your agreement. A copywriter will also need to ensure that ownership of the content is addressed.
When I refer to content ownership, I’m referring to copyright law. As a creative, if you are creating original content, you are likely dealing with work that is eligible for copyright protection.
The US Copyright Office defines a copyright as “a type of intellectual property that protects original works of authorship as soon as an author fixes the work in a tangible form of expression.” In other words, if your work is original and it’s fixed in a tangible medium, like a book, photo, graphic, etc, it is likely eligible for copyright protection.
As the creator of the work, you hold any copyright rights, which includes the rights to:
- Reproduce the work;
- Prepare a derivative work based upon the original work;
- Distribute to the public by sale or another type of transfer;
- Perform the work; and,
- Display the work.
As the owner of the copyright, you can give some or all of these rights to others. Or, you can give them permission to use the content in certain ways.
This is an extremely important area of law for creatives because, as the copyright holder, you likely have a client who will need to use or own the content you’ve created under the agreement. So, how do you address this?
There are typically three key terms to be aware of for your client agreement when it comes to content ownership in client agreements.
- First is Work for hire. Under this type of clause, your client owns the deliverables you create.
- Next, is an assignment of rights. Under this type of provision, you assign all of your copyright rights to your client. This may be done for final approved versions or something you hold until the final payment is received. An assignment needs to be in writing, so, if this is your intention, it needs to be clearly addressed in your client agreement.
- And last is the license to your client. If you retain ownership of the copyright, but you allow your client to use it in certain ways, you’re giving them a license. For example, you may give them a license to display the content, but they can’t resell it. If you use this option, get specific about what the permitted uses are.
If you want to learn more about content ownership, I recommend listening to episode 13, where I talk about the topic and give a lot of examples of language that you may use in an agreement.
Protecting Your Brand
Next, let’s talk about protecting your business and the brand that you’ve built.
For many creatives, the most important types of intellectual property are trademarks and copyrights. We’ve talked about copyright, but let’s review trademarks too since it’s important in protecting your brand.
A trademark is something that identifies your brand as the source of a product or service. It can be a word or phrase, a logo or symbol, or your company name. It can be anything that helps distinguish your brand in commerce.
If you are using a distinctive name for your business or service packages, I strongly recommend that you consider whether it is time to apply to register a trademark with the patent and trademark office.
If you register your trademark, it gives you the exclusive right to use that trademark for the types of goods and services that you offer.
Talk to a lawyer to see if this makes sense for your business.
Adding Digital Products
As your business grows, you may add digital products, to give people a DIY option. This could include ebooks, printables, or courses. And don’t forget, digital products can also include freebies, like lead magnets, which are just ebooks that you’re offering in exchange for an email address.
First and foremost, ensure that you are including a copyright notice on the content. This is the copyright symbol and your name. This puts viewers on notice that you own that content.
You will also want to have terms for your digital products, which can be added to your website’s terms and conditions. If money is being exchanged for your products, you should include a purchase policy that discusses refunds and any other important information regarding the purchase.
Additionally, as I’ve mentioned before, if someone can purchase your copyrighted content, your terms should discuss how they can use that content.
Building Your Team
The last thing I want to discuss today is building your team. As your business grows, you may not have the capacity to serve all of your clients personally. This is often when it’s time to start building your team. A lot of creative business owners start with hiring subcontractors to help serve clients, but you may want to make other additions to your team. Depending on the services you offer, you may also move to a creative agency model.
When it comes to hiring, it’s really important to know what type of role you are hiring for and whether that person will be an independent contractor or an employee. If you plan to hire an independent contractor, be sure to check your local laws regarding hiring contractors as they are not the same everywhere.
Remember, it’s important to have agreement between you and your team members.
If you’re hiring subcontractors to assist you in serving your clients, you may want to exercise caution and ensure that you’re providing guidelines on how the subcontractor can communicate with your clients and if they can do any work for your clients in the future, if you aren’t involved.
This wraps up our overview of legal for creative business owners. Now let’s talk about today’s action steps.
- First, do you have a set business structure? If not, this is a good time to consider if you want to create an LLC.
- Next, do you have the website policies you need for your site? If you sell digital products, you should also ensure that you have a clear refund and purchase policies.
- Next, are you using a strong client agreement? This agreement should help protect your business and set out clear expectations for your client. This is one of the most important legal things you’ll need in your business, so make sure you have it.
- Next, is your client agreement clear about content ownership? As a creative, this is especially important.
- Next, have you protected your intellectual property? If you haven’t, consider whether or not a trademark is appropriate for your business.
- Next, have you hired team members? Do you have an agreement for those team members? If not, you know that I’m going to recommend that you get one.
- Last, as always, if you have questions on any of these aspects of your business, please talk to a lawyer. If you aren’t sure where to start, I do offer strategy sessions through my law firm, Liss Legal and I’d love to talk with you more. I’ll include a link in the show notes.
Thanks for joining me for today’s episode. In the next episode, we’ll continue this series and we’re talking about legal online service businesses. Remember, you can download a PDF with resources at businessese.com/creativelegalguide. There’s a link in the show notes.
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