Legal Q & A for Creative Entrepreneurs - Brittany Ratelle - Live IG replay 3.6.18

Hi guys, Brittany Ratelle here with my little weekly Q&A, free legal question and answer for creative business owners, small business owners, entrepreneurs, solopreneurs, however you want to call yourself. I won't put that label on you, you have that label, but I am just trying to find you wherever you are. I'm going to give this a minute to spin up and reach whoever it needs to be. Hey! Hi, Kids Are the Worst! So glad you're here! Especially since I'm fully aware that Allison Show is going live right now too. So I mean, hard to compete against that. So I really appreciate anyone, anyone who's here. Okay, let me turn on Facebook Live and get all the things. And then I'll launch into— I just got one question before, so I'm gonna start with that question, and then after that, the floor is open for you. So you can just go ahead and put in the comments if you have a question for me. And, uh, while I'm doing that, if you want to put where you're from or what your business is, if you want to share that, I'm always curious to see where people are finding me and what their businesses are so that I have, um, a better idea of how to serve you guys and what information that I need to be better prepared and offer you so that you can keep moving forward with your businesses. So, okay. So start, Brittany Ratelle. I am an attorney licensed here in Utah. Um, but I have clients from all over. And while I am a licensed attorney, I'm not your attorney unless you want me to be, in which case, um, let's sign up for a free chat so that we can talk about your business. You can tell me about what's bothering you, what's keeping you up at night, where you want to be, and maybe where you feel stuck. Um, and then we can go forward from that. So, um, if you want to hire me and what that looks like. So, but, um, just to clarify, anything that we talk about today is not official legal advice, and this is not an attorney-client relationship. This is just me jumping on Instagram and Facebook Live and doing the thing. So, so that's a disclaimer so that you have that, so you understand what the expectation is. Okay, so the question I had today from someone was, do I need to have an official business registered to be able to enforce a contract? And this is a real— this is a really interesting question because I get this a lot from someone that says, Well, how will registering my business affect taxes? Or like, I'm not sure, I'm maybe in that in-between where I'm like, maybe I'm a hobby, but maybe I'm a business. Like, do I want to jump in and register a business? And what if that like will flag, you know, me for the IRS? And people have a lot of worry here and a lot of fear, which is totally understandable because this is kind of a confusing part of like, when are you a business? Do you just like manifest your business or like at what step? So I will tell you that first of all, the simple answer to this question is, is that no, you do not have to be a formally registered business, meaning an LLC, a partnership, a corporation. When we talk about registering your business, we usually mean picking one of those business types. You do not have to be one of those things to enforce a contract. You can enforce a contract just as yourself, I, Brittany Ratelle, and in fact, when you think about it, We have contracts that we sign all the time, we just don't think about it. When you sign on your credit card receipt, that is a contract. When you go skiing and you look at the back and it says, "Hey, by the way, if you get death dismembered, lit on fire on the ski race, that's not our fault," that's a contract that you're agreeing to. So it's something that you enter in all the time, we just don't think about it. All those terms of service every time you update your iPhone that I'm sure you read, right? I know you don't read them. I know I don't even read them. Not those ones. They're too long. They're too long, Apple. So anyway, um, you can definitely enforce a contract. Um, however, I will say, I will give my little caveat there. I really think that if you want to be making money and you plan on making money in your business, um, more than like $600— that's how the IRS defines it— if you are making more than $600, you are not a hobby, you are a business. Then I think— I do think you should incorporate as an LLC because It's so cheap in most states, like here in Utah, it's very easy. And what it does is it separates your business assets from your personal assets. So that says if you do have a problem, if you do have to sue someone because you had a contract and they didn't perform, that's, that's a lawsuit. Or you have a problem because Getty Images comes after you and says, that's our picture, you put it up on your website or your social media profile. That's true stories. That happens a lot. And they're going to sue you for it, they cannot get to your personal assets. You know, think of it like a bucket. Okay, this is your personal asset, okay, bucket. This is your business. You want to make sure these are in separate buckets, okay? And unless you have set up a business, these buckets are in like the same thing, okay? You want to separate it. So you want your business, you want your home to be like your 401k and your savings account and whatever you share with your partner, your husband or something, your house, your cars, all of that in here, bucket. You want just your business stuff in this bucket. And that way if someone has a problem with you, it just stays in this bucket. Okay, this is the problems and they deal with. So if, if you get sued, heaven forbid, and heaven forbid if you lose a lawsuit, the judgment can only come out of this bucket. So they can only get to whatever you put in that business. Okay, which I understand still sucks. Yeah, but not as sucky as this situation is. Okay, all right, so that's why you want to establish an LLC. I have a whole podcast episode about this, so if you are not listening to my podcast, if you're not a subscriber, please go wherever you listen to them. It's called Law and Wit Creative Council for Entrepreneurs, and I have a whole episode. I think it's episode 4. I'm not good at memorizing those. I know some people are really good at looking those up. I think it's episode— hold on, I could tell you for sure which one it is. Um, Law and Wit, and I have a whole episode that is just on LLCs, and I break it down about why you need one, how you do it, do you need an attorney to do it. You don't, but but it's helpful. I think it's really important if you're having a multi-member, meaning if you have a partner and it's not just you, it's not just a one-woman shop, you have someone else, you really should hire an attorney to draft the operating agreement because that's the agreement that's basically going to say, this is how it's going to work in our business, and this is who owns the intellectual property rights, and this is how we're going to make decisions, and this is how we're going to handle when someone wants to leave. Either they're kicked out or they want to leave because That's gonna happen eventually, and if you don't talk about it, then you are just planning on a fight, okay? We say this in estate planning or not, okay? If you don't make a plan, then your plan is to fight, okay? So don't plan on fighting, plan on working that out, okay? So anyway, go listen to that episode. Okay, I'm gonna pull it up exactly which one it is for you. And okay, that's not the one I was thinking of. Okay. Oh, here it is. Lon Witt episode 6. Okay. So you can go, or you can find it on my website. So that's BrittanyRatelle.com/6. Um, and that episode will talk all about LLCs, everything you want to know about LLCs. Okay. All right. So that's that, what I got beforehand. So I'm going to open it up for anyone else who wants to jump in with a comment, um, who has a question for me. So it could be anything, uh, of small business related, running a creative business, whether you're a blogger or graphic designer, photographer, even product-based businesses, you know, having what you need on your website. If you're a coach or an educator, those are a lot of the people that I help out, a lot of clients that I have. I just got back from Alt Summit, which was last week, and I loved it. I had a fabulous time. It was in Palm Springs, so, you know, who wouldn't have a great time in Palm Springs? So I'm, you know, I'm feeling on fire because I got to go attend a lot of really great sessions. I saw Miranda's on here. I attended Miranda's sessions, Live Free Miranda. She did a great job talking about negotiation. And yeah, and had a great time meeting really just super, you know, independent and creative women who are hustling. They're making stuff happen from all different kinds of businesses, not just bloggers, but kinds of all kinds of folks in the creative sphere. Okay. Okay, no one else has any other questions? They want to jump on and put it right there. I'm here for you. I mean, I've still— my sitter's still here, so I mean, might as well get my money out. If there's any other questions, let me make sure I'm not missing any that you guys want to put in. I am happy. Oh, now they have got like the wave function. They just keep on updating these. Oh, now we turned around. I did too much. I did too much. That's my Facebook. That's actually my copyright protocol, the portal trademark. So, because I was working on someone's trademark. Okay, anyone else want to jump on? So if not, then I will just tell you a little bit about my other free resources that I have for you. So you heard me talk about the podcast. I also have a newsletter. So if you're not on that, I send that out. I try to send that every week, but don't quote me on it. And I just found a cool name for them. It came to me on my plane ride home. Legit with Britt. So I'm gonna rename it that, 'cause we all know how important names are. So, and the newsletter has tips in it. I post the link to this, so if you wanna rewatch these, or you wanna watch some of the old ones that I've done, I post the links to that on YouTube. I give some recaps of some of the stuff and tips that I give on Instagram, and usually a new tip. And we all know how hard it is with the algorithm. Sometimes you see stuff, sometimes you don't. So I know it's hard to depend on that for Instagram, so that's why I put that stuff in my newsletter. That way you can actually save that, bookmark it, put it where you need to in your business resources so that you can find it again, um, so that it's an actual useful resource to you. So if you want to be added to that list, you can do that at BrittanyRatelle.com/newsletter. And that's Brittany, B-R-I-T-T-A-N-Y-R-A-T-E-L-L-E.com/newsletter. And if you sign up, um, I've got a little freebie for you because it's all about the freebies. We all know no one gives out your email address unless, you know, you're getting like a gold tiara. I mean, you're not a fool, obviously. You're a seasoned, uh, business owner. Um, I have like a legal checklist, so it's kind of a one-pager. It just gives kind of a brief overview of some of the legal issues that you need to be thinking about if you are owning a creative small business. So it's a really good starting point of things that you, you can start thinking about of, have I done this? And what do I need to have on my website? And when do I need a contract? And I thought I only needed a contract here, but just some of the things for you to start thinking about and doing some of that thought work on your end. And that way, if you are want to talk to attorney, um, you have some things to start with. And so you're not just like, hey, let's shoot the bull and you could charge me for it, um, which I know is always a huge concern for people who are small business owners. I get it, you're on a tight budget, you're bootstrapping, you're trying to make stuff happen, you are do not want to talk to someone and have some gargantuan mysterious clock, price clock, just running, running, you know, like it's a national debt calculator in the background. Um, and I, I understand that fear. So that's why I give free consultations on phone for 20 minutes so we can just talk about stuff and you don't have to worry. It's totally free. And that I try to do a lot of flat fee, um, and estimates in my legal services because again, I want you to have that security that you know how much things are going to cost, that you can plan a budget for it. Um, I don't I don't like surprises in my business, and I'm sure you don't like them in yours. So, okay, um, let me see if there's anyone else has any other questions. Okay, and then you— she says she'll take notes. Okay, um, Millionaire Marissa, when someone contacts you to license your work, how typical is it for them to buy rights to it in perpetuity? Um, that— it depends on the industry. So I mean, with caveats, um, I'll say it depends on what the industry is and how much they are paying you for it. So like, for example, I was just working on one of these for someone, and they're in the manufacturing industry, and the contract was that the licensing would be that the company who is manufacturing the products would be buying the rights to it in perpetuity, but it was only select designs. What the artist was retaining, it was that she was still going to be able to make other works under her name, which is really important that she still had, because she'd established her own kind of brand name and business, and she was still able to publish and make things under that name and sell either herself or work with someone else to sell. But that whatever those designs they decided that she sent off to this manufacturer, that manufacturer was going to buy and then give her— in this case it was 5% was a royalty feedback. So, um, and that's, and that's a good deal, um, for a manufacturing product like that. You know, you don't get to really be much higher unless you're already a huge name like Disney or something, in which case You know, you could probably make it your own, or you could certainly use that leverage to get a higher rate in terms of the royalty. So, um, but yeah, what you really want to be— and that's a really good call— is that you really want to be careful of the word perpetuity, because like that says, it's just like Smalls in Sandlot, forever. Okay, perpetuity is forever and ever, and anything you might ever want to do with your business and your brand and your trademarks and your designs, um, This got me thinking. As I was at Alt this week, I was talking with someone who is an intermediary in the creative world, and she helps put together these contracts between people, between brands and influencers. And she was saying, she was like, "Don't quote me on this." And I'm like, "Well, I'm not gonna quote you, but like, I'm gonna quote you, just not your name." And she was like, "I am always amazed at these bloggers who sign these contracts and they just give away the frickin' farm." Except she didn't say frickin', but you know, this is a G-rated podcast. G-rated Instagram Live. And I was like, yeah, they do. And, you know, I don't want to make you guys feel bad or make you feel stupid. That's not why I'm here. But I am here to say, like, please have someone look at those contracts before you sign them. Please, please, please. Especially if it's your first contract or your second, or you're still not quite sure what exactly it is you are giving up, what bundle of sticks you are giving to the other person you're partnering with, and what you get to keep. And if you don't understand that interplay, it's really hard to negotiate for a good price. Because it's not saying that you wouldn't give some of those sticks up and maybe you would let them license internationally or license in this class of goods, this kind of product line, or this product. But if they are, then you want to know that you're agreeing to that. You don't want to be surprised when— and this happened for another horror story I got when I was at Alt— was that someone who was an illustrator said they had someone do a licensing deal with them. They signed, were like, awesome, my stuff is going to be like in anthropology or whatever. No, what happened is the person who was their licensing partner just sat on it. The only reason they made that deal, and they paid them a little bit of upfront, an advance is what it's called, um, but the rest was for royalties. That's where the big money was going to come. But they just sat on it and they didn't make a thing. Why would they do that? To put her out of business. Because now for 2 years she was locked down and couldn't make her art. Okay, so that's what— that's what can happen if you're not careful about licensing agreements. They are a great tool to grow your business, to partner with people, to reach into markets that you couldn't get to on your own, but you need to be really smart and savvy about it and know what you're agreeing to and what you're not. Anyway, I'll get off my soapbox for that. We had a couple other people join. Guys, Brittany Ratelle here, attorney, here for your creative questions. I've got a few more minutes, so if anyone else has a question that they want to drop in the comments, go ahead and do that. I'm happy to answer them for you. But yeah, moral of the story is please agree, hey, what you're doing with a licensing contract. So, and definitely you want to note words like perpetuity, likeness. Your likeness is your face, is your moneymaker. And like he says, Ashton Kutcher in Yours, Mine, and Ours, this is the moneymaker. And you want to be careful when you're giving someone right to use your likeness because what you might think is like, oh, they're going to post about me on their social media page, like that'll be so great, or do like a guest post. You may not know that they're gonna use your likeness for a print campaign and, or use it for all kinds of other purposes, not give you credit, maybe not even identify you, and certainly use that for way more. And they should have paid you more, but they didn't, and they don't have to, okay? And if you don't push back on that and you just sign it, then, you know, that ship has left the harbor, you know, that train has left the station. So on that. Okay, I don't think anyone else had a question, so okay, I'm gonna mention resources again in case you didn't hear them. My newsletter, BrittanyRatelle.com/newsletter. It's useful, it's to the point, it's funny. Yeah, law can be funny. Yeah, I mean, challenge accepted, okay? And that's for you. Thank you, people do need to hear this. They do, right? Okay, and the other one is Law and Wit, which is my podcast, okay? Creative Counsel for Entrepreneurs on anywhere you listen to podcasts. Here's my challenge for next week. If there's someone you know of who thinks— you think they could use this kind of information, please tag them, send this to them, let them know I'll be here next week, same time on Tuesday, okay? And I'm here as a resource for you. I get that law can seem scary and boring and expensive and out of touch when you're a creative small business owner. I understand all of that. That's why I'm here to be a resource, and I understand that you don't really want to hire someone like me before you get to know me. So I'm here to offer you resources to try to help, to try to help create more confident business owners because I like creatives and I like working with creatives and I think that this is a really great time to be a creative business owner and I want you guys to be able to have the tools and the info to be more confident business owners because that's what you are. Okay? So own your business and I'll see you next week. Okay? Bye.