Most of us are better at picking fonts and color palettes than the “paperwork part” of our businesses. We all have those “Am I doing this right?” thoughts that haunt us as business owners. We know that “legal stuff” is important but we hardly even know what it entails, let alone how to do it right and feel confident.
- Contracts, taxes, and insurance… :/
- What if one of my contractors falls and hurts herself on an event day?
- What if I’m doing my taxes wrong?
- What if something goes wrong and a client tries to sue me?
We tend to spend more of our time on the urgent, fun, or familiar parts of our work because we don’t know how to tackle these challenges head on. We just let them hang over us and take up space in our brain, never really knowing if our businesses are truly protected.
But what if “all that legal stuff” wasn’t as complicated as it sounds?
The security of your business is like a simple, three-legged stool.
Each of the three legs of the stool represents something you need to keep your business on solid ground.
LLC: LLC stands for “Limited Liability Company”, and it’s one of the ways you can register your business with your state. When you first start a business, unregistered, the law sees it as an extension of you, rather than its own separate thing. That sounds okay at first, right? Your business is still small at this stage, it probably seems like there are no real risks on the horizon. But it doesn’t take much for things to get messy. Right now, unregistered, if someone decides to come after your business for any reason, they’re actually coming after you. Your name, your credit score, your home, your car, your investments, your grandmother’s ring—everything is on the line. So, while it’s not illegal to have an unregistered business… it is unwise. Registering your business is a very easy and usually cheap insurance policy to protect the important, personal parts of your life from the risks associated with running a business. Stay tuned: We’ll be sharing more about how to register your business later this week.
Worker’s Compensation: Pretend you’re a photographer onsite at a wedding gig, and you’ve hired a second shooter to work alongside you. Halfway through the reception, your second shooter falls down the stairs and breaks her wrist. Not only does she have hospital bills to deal with, she’s also out of commission on the photography front for at least a month. In that kind of nightmare situation, did you realise you could be responsible?
Good news: If your business had a worker’s compensation policy, you’d be good to go. Worker’s comp covers your contractors and employees while they’re working for you, and if anything happens to them, it foots the hospital bills and pays damages for the work the injured person can’t do during recovery. If that’s not enough to ease your mind, worker’s comp also covers you in case the employee decides to sue. The bottom line? You can’t make sure no one gets hurt, but you can protect your business in case they do.
Taxes and Finance
Filing as an S-Corp: As your businesses grows, it’s likely your tax situation will change too. One of the first steps in saving money at tax time is to move from being an LLC to a S-Corp; that way you’ll get all of the legal benefits of running a small business through an LLC, but can be taxed as an S-Corp. Filling out this one form could save you thousands of dollars a year. Don’t worry we’ll dig into this topic more tomorrow.
Why filing as an S-Corp can save you thousands of dollars a year.