5 LEGAL TERMS SMALL BUSINESS OWNERs SHOULD KNOW
By Leyya Sattar (Written on our original website in May 2020)
5 IMPORTANT LEGAL TERMS EVERY FREELANCER AND SMALL BUSINESS OWNER SHOULD KNOW
Aside from watching Judge Judy, How To Get Away With Murder and Legally Blonde, my knowledge of business law is fairly limited and can be quite overwhelming and unnecessarily complicated. It wasn’t until 2018 that I began to think about contracts and compliance in relation to my business or our clients.
I still find legalities tricky, but navigating COVID-19, work disruptions, and a growing business pushed me to learn more. I've had some insightful conversations with legal professionals and am excited to share what I've learned. Surprisingly, I became interested in invoicing, cancellations, and contracts. Since we have a large community of small business owners and freelancers, I want to share these insights and help you understand how to protect your business too.
So…welcome to Law and Order with Leyya in Lockdown. Today, we will examine the five most important legal terms every freelancer and small business owner should be aware of.
CONTRACTS
Whether it’s a contract you have with a client or a contract that a supplier has with you - you need to make sure you understand every word. If you don’t understand anything, ask questions to get clear. You have every right to understand what you’re agreeing to, and don’t feel you have to agree to everything - this is a two-way conversation. It’s also important for you to value what you’re bringing to the relationship because no one else will do it for you. Ensure your rights are protected and you’re not being exploited under the guise of being given “exposure”.
PAYMENT TERMS
This is important, if you’re a service-based business and even a product-based business, to have clarity on what your payment terms are. So answer these questions:
How often are you going to invoice?
How much money do you need to make to cover your monthly outgoings?
How long do you want the duration between payment and invoice to be? This can range from 7 days, 14 days, to 60 days. For cashflow, at Other Box we negotiate between 10-30 days for our payment terms with clients.
What happens if people don’t pay you on time? Will they incur a late fee or interest charges on late payments? And will you be comfortable enforcing this?
Make sure your payment terms are in your contract and agreed to by all parties before you start any work. At Other Box, we ensure a 50% deposit has been made before we begin anything. Put yourself and your business first, and what works best for you so you can get paid on time and run your business efficiently.
TERMINATION / CANCELLATION TERMS
This is particularly relevant if you’re a service-based business or provider and if you agree to a project but one of the parties involved needs to cancel. Before getting into a business relationship and work begins, make sure everything is in writing in your contract, and think about the following:
Do you require a deposit to commence work?
Is the deposit refundable?
Is there a certain time frame in which you can rebook the service if a party needs to postpone?
Are you happy to cancel a project if a certain amount of notice has been given? If so, how much notice is needed, what happens if some parts of the services have already been provided, and what happens to any already paid amounts?
Before entering the relationship, clarify the cancellation terms and make sure you’re comfortable enforcing them. This means having your cancellation terms in easy-to-understand language so you can discuss them with your client if you need to put them into practice.
INTELLECTUAL PROPERTY (IP)
Start thinking about the value of what you do. Even if you’re at the very beginning of your journey, all you have is a brand idea, brand awareness, or building a following. It might be that your brand idea has a lot of value, so start thinking about protecting your IP as soon as possible. This could look like:
Copyrighting
Trademarking
Design Applications
Think about your work and its intrinsic value to what you’re building and creating.
DATA PROTECTION AKA GDPR
This isn’t fun or exciting, but it is important. Think about how protective we are over our personal information, so it’s key for your audience to know how you’re handling their data through a privacy policy/cookie policy. Whatever the information your audience is giving to you, make sure you’re clear on the following:
Why you’re collecting it, and where you’re collecting it from
What happens to the information once you have it
Who has access to it
Who you may be sharing it with
For more information on GDPR, check out the ICO website (Information Commissioner’s Office). It provides information on your data protection obligations, how to be compliant, and what you’re responsible for when collecting people's information.
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Please note that the content of this blog post is for your information and education and does not constitute legal advice for your specific circumstances.
