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Legal Requirements for Small Businesses with Ana Juneja

Jenny Melrose: Business Strategist Episode 447

Starting a business without addressing essential legal requirements is gambling with your future success. In this eye-opening conversation with intellectual property and business attorney Ana Junca, we explore the critical legal foundations every entrepreneur needs to establish from day one.

Ana reveals why most entrepreneurs fall into two dangerous categories—the accidental entrepreneur who stumbles into success without preparation, and the intentional but sloppy entrepreneur who plans inadequately. Both approaches create significant vulnerabilities that could destroy your business. She walks us through crafting a comprehensive business plan that satisfies legal requirements while setting you up for financial success.

The LLC vs. sole proprietorship debate gets settled once and for all, with Ana providing compelling reasons why an LLC is worth every penny for the protection it offers. We explore the nuances of industry-specific licenses and permits, essential contracts every business needs (from operating agreements to NDAs), and website compliance issues that are leading to costly lawsuits against even the smallest businesses.

Perhaps most valuable is Ana's expert guidance on intellectual property protection in the age of AI-generated content. She clarifies the critical differences between trademarks, copyrights, and patents, explaining exactly what entrepreneurs should prioritize based on their business model. When content theft happens, Ana shares the step-by-step approach to effectively address infringement without wasting thousands on unnecessary legal fees.

Ready to protect everything you're building? Connect with Ana through the links in our show notes for a free consultation about your specific legal questions. Don't wait until a problem arises—establish your legal foundation today.

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Speaker 1:

This is the Influencer Entrepreneur's Podcast with Jenny Melrose, where I strategize with business owners on how to grow and scale their businesses to hit their income goals. This is episode 447 of the Influencer Entrepreneurs Podcast with Jenny Melrose. Ignoring these legal requirements could cost you big. You don't want to make these common mistakes. In this episode, we're going to be talking about legal requirements for small businesses with Ana Junca, and you are going to absolutely love this episode. You're going to want to make sure, though, if you haven't already grabbed our strategic growth guide, that you do so. It's really going to help you make sure that you have your positioning, your content, all set up so that you can make sure that you attract the ideal audience and grow your business as quickly as possible. All right, let's dive in. I am so excited about this conversation about legal requirements for small businesses not always everyone's favorites, but definitely a conversation that I think is so important to have with a successful business. But before we actually jump into that, would you introduce yourself and your business to my audience?

Speaker 2:

Sure, my name is Ana Janaja and I am an intellectual property and business attorney. So I help clients who are influencers, celebrities, athletes, small business owners, medium-sized business owners and corporations with their business and mostly their intellectual property needs so patents, trademarks, copyrights. But since I work with so many mainly influencers and athletes, with the new NIL changes they have, you know, really had a big need for some basic business services. So I now do a lot of small business work with them and I've learned a lot about their needs and it's easy for me to anticipate kind of things that go on in their world which maybe they've never even heard of and thought of. So it's, it's been amazing to you know be working with that type of clientele now.

Speaker 1:

Fabulous, I love it. So let's talk about what are the first legal steps someone should take when starting a small business.

Speaker 2:

Sure. So I think that the first step is always going to be a business plan. So this is actually something that a lot of lawyers don't even talk about and people in business don't talk about. But I have found that a lot of small businesses you kind of fall in two camps One is going to be that accidental, and then the other is going to be the intentional but intentional, but sloppy. So what that means is maybe people plan to start a business they always wanted to start a business, but they don't really plan it out to the detail that's required to be successful. And then, on the other camp, where you are accidental I would even consider myself in this camp because I never had any idea, you know, that my social media was going to blow up the way it was and that I would have to, you know, navigate that world.

Speaker 2:

It was all very unexpected and a lot of businesses actually start their whole business that way. Is that something just you know is accidentally successful? And then they retroactively are creating that business again without a plan, without any details. So that business plan that you can create, where you're anticipating everything about your industry and you're doing your research and you're really laying out and doing backwards to see how you're gonna make all the numbers work and how much revenue you want. That is really really important. Very industry specific, business specific, but something that you know most most people, I would say 99.99999% of businesses. You know, don't do, but you got to think there's a reason that successful businesses succeed and it's because they make money. So that business plan is actually what's going to make you money. Right, and don't skip it. There's no you know you just, there's no success without that planning.

Speaker 1:

What are some of the key elements that you feel need to be in the business plan? You obviously talked a little bit about revenue and then working backwards. When you say working backwards, what do you mean by that?

Speaker 2:

So let's say you know I'm just using basic numbers so let's say you want to make you know $1,000 a month in profit. That means what do you need to make you know if your product is is has a cost to it, if your service or time has a cost to it, or if your service or product is not $1,000, maybe it's $5,000. That means you need two of them. So, inside and out, what you want to make means you need two of them. So, inside and out, what you want to make, what it's going to cost you to be able to deliver that, and then how are you going to acquire people to purchase that from you? And then what's you know, your projected growth, what are your different opportunities to get customers, get clients? What's your competition Like? What are they doing? So it's just kind of all of that wrapped into one.

Speaker 2:

I would say that's the number one key component of the business plan is figure out how you're going to make money, how much do you want to make and how you're going to make it. That's the number one key component, but everything else as well. So you want to put in there everything you can think about your business. What are things that you want to sell. Where are you going to get them from? Who are you going to hire? Where are you going to get them from? What are your competitors doing? And there's lots of templates for business plans online as well. You can just Google you know candy shop business plan and you'll find you know templates for that?

Speaker 1:

Yes, no, absolutely. And you're really talking a lot about the marketing as well. That'll go into that. So, when you're talking about that audience that you're going to find so that you can build those customers and make those sales, so that you do have the revenue coming in that you're anticipating, I love it so good. So what are? When we're looking at what should entrepreneurs choose when it comes to a business structure, is there one that you recommend? Does it really depend upon by state? If we're talking about LLC, sole proprietor corporation, do you have a recommendation?

Speaker 2:

Yeah, I typically advise people and this is general information because it's definitely case by case but you know, I typically say that an LLC is a very cheap, easy, non-formal way for you to protect yourself. So if you can, you know, protect yourself and limit your liability for a couple hundred dollars, why would you not do that? Of course it's a little bit of paperwork and if you are really struggling with it and you have to hire a lawyer, or if you want an anonymous LLC, sure it might be a couple thousand dollars, but that is still for the protection you get, very, very, very inexpensive, you know, versus if something really goes wrong. I mean, it's just it's.

Speaker 2:

I always say, when it comes to the legal aspects of business for people who are choosing between LLC or sole proprietor, I would never recommend somebody being I can't imagine a scenario, I guess, that I would recommend somebody being a sole proprietor. I'm sure there's scenarios out there. I've never run across it, you know, in my career. But I always say that when you're. You know, starting a business is a luxury or being an entrepreneur as a luxury, but the legal aspect of business is not a luxury, it's a requirement. So it might be a luxury that you're entering into business because you have the capital and flexibility to do so. However, when you're in business, it's really up to you as a business owner to be responsible and not cut even like such extreme corners that you're not even getting yourself an LLC. You know, whether you need a corporation versus LLC is a much more nuanced discussion that you would probably you would need to talk to an attorney about, because it's going to depend on where your investors coming from, what are. You know how many people are interested and the different splits of shares and things like that. So, whether a corporation or an LLC makes sense for you, you're probably not one of the kind of influencers or small businesses that we're talking to here. So if you are getting some sort of outsider funding, a corporation might make sense for you, but it's a very nuanced decision.

Speaker 2:

Most startups or small businesses, especially in the, you know, online space or creatives they tend to be deciding between the sole proprietor or not doing anything, not registering anything, or an LLC, or they think they should get a DBA instead of an LLC. I mean a DBA, by the way, for everyone listening because, for whatever reason, every podcast I go on and say this. I'll get so many questions later about it, but a DBA is worthless in today's day and age. Basically, a DBA just allows you to cash checks in another name. It holds zero anything and it's like a waste of paperwork, even if your state doesn't charge you for it. So deciding between sole proprietor like basically operating as yourself or an LLC an LLC is a really cheap and easy way to protect yourself. People, businesses who are starting a business and they want to cut corners and not even pay like $125 fee for an LLC, I can tell you right now you won't be successful Automatically. I can tell you.

Speaker 1:

Yes, no, just being able to have that coverage for yourself. I think it's absolutely necessary. I think we get a lot of questions about the S-Corp and I always say tax to your tax accountant as well, because of course there's tax implications that come up with that and they'll vary by state for sure.

Speaker 2:

S-corp is not something you get. A lot of people don't know that too. You have to have an LLC or a corporation and change it to become S-corp status. So that's just actually a determination that, yes, your accountant will tell you, because it's a determination that's based on your numbers. And if you have an LLC and you're not making money but you just want to be an S-corp, just to call it an S-corp, it's going to cost you, right, but if you're making a certain number amount of money, then being an S-corp would save you money. A lot of people don't understand that that distinction is not something they even need to spend like one brain cell on, because the number will just tell you what to do. So it's between, I would say, sole proprietor which like throw that option out but LLC and C Corp.

Speaker 1:

So it's, you know, that's kind of the real options. No, absolutely so. What kind of licenses or permits do small businesses typically need?

Speaker 2:

So this is very industry specific and so I'll just give us some examples. You know you really need to research your industry because now we're living in a day and age where business is so highly regulated. So if you are, you know, in the restaurant industry, you are obviously going to need a liquor license if you want to sell, you know, if you want to have drinks right, so at your place. So that is its own type of license. If you are running an e-com store and maybe your LLC is based out of Florida or a specific state, you will need, of course, things in Florida. But let's say you open up a pop-up shop for your e-com store in a different state, you might need an application to transact business in that state. If you have a certain amount of sales in different states, you know, depending on what state you're establishing, you will need sales tax licenses. I'm talking for e-com businesses. So there's depending on what, exactly, what product or service that you're selling and how you're selling it whether it's totally electronic, remote or whether it's in person will really depend on what different permits you need. That is something that's very important. You never want to be operating without a permit and you have to check your county. You have to check your state, your city and federally in your industry, so there's multiple layers that you need to check. Good news is all information like that is typically available online. But, yes, that's all. That's all supposed to be detailed in your business plan, by the way, and the associated cost of obtaining that, because maybe you could, you know, be able to get certain types of licenses online.

Speaker 2:

But if you you know getting a liquor license I mean that's a little bit more complicated You're probably going to have to get an attorney for that. Now, you know, my mom got a liquor license for a restaurant that she, you know, was investing in all by herself. She did all her own paperwork. But not everyone can do that. So it really just depends on you know how you are with your own. You know paperwork and and you know dealing with governmental filings and things and versus. Is that worth your time investing into it or should you hire an attorney to deal with that aspect of it for you? But what you don't want to do is you know if you have a building and you have renters in it and you really need, you know, a fire insurance or you need certain things there. You don't want to skimp on anything.

Speaker 1:

Yes, no, definitely want to make sure that you are covering yourself for sure. So, speaking of what key contracts should every small business owner have in place?

Speaker 2:

Okay. So when people get their LLC, there's three legal components to an LLC and it's filing the LLC, getting your articles of organization, getting your EIN, which is kind of your LLC social security number that you get from the IRS. Then you also need an operating agreement for your LLC or, if it's a corporation, that's you know, same thing, just called bylaws. But that document is basically how your business runs and you want to have a very well-drafted document that is your operating agreement bylaws, because you want control over how your business runs. It tells you everything about what's going down in your business when different things happen. And if you don't have that, you have one already. You have a contract, but it's the state's contract. It's kind of like if you get divorced and you don't have a prenup, you kind of have a prenup. It's just the state's rules. Now the state's rules for your business. You know marriage ending, whatever it is, may not really be what you want, how you want things to go down Right, so that operating agreement can control that. Now it's even more critical for that business. You know formation operating agreement document when you have multiple parties in your business, because then when your business ends, it's kind of like a divorce, like, actually, and, um, you know, you need to know how things can are going to split, so, um, and how things will be distributed and who has voting power and this, and that there's so many key components in that. That's one a lot of people skip, that, because not every state, you know, requires you to have one, but that's very important to have. And then some other ones you should have are, you know, again, very industry specific, but you should have basic vendor contracts. So a lot of people do business with vendors and nobody know, you know, I mean, do you want to get paid, do you want to get your stuff that you paid for? Like vendor contracts, client contracts, customer contracts, these are basic things but people don't do them. But you know, at the end of the day, I, you know, we get calls at our office all the time from people who are like, yeah, I, you know, wrote all these songs for this record label and you know they never paid me and I'm not sure if I'm allowed to use them and I'm like, oh well, you literally never signed a contract and even though they said that they would pay you and maybe they were Venmo-ing you some money here and there really hard. It's very hard to retroactively change things. So if you want to get paid or if you want to get the stuff that you paid for, vendor contracts and your customer contracts are important to have.

Speaker 2:

Some other things you want to consider, like small businesses. Really common ones are NDAs. So when you're discussing things with people or you're going in for investor meetings or you're getting things manufactured from overseas, you want to have an NDA. You don't want to be ordering stuff from a manufacturer that you found on some website there's a really popular one, it's slipping my mind but you just don't want to. You just don't want to be ordering stuff, giving your designs, giving your information away, when they are just going to go sell it to other factories in China or wherever. Right, yeah, so you know so important to have an NDA.

Speaker 2:

Another big one is a huge one that businesses miss and it is actually having a compliant website, which requires having certain contracts and language on your website. So privacy policy and disclaimers you know terms of use, terms of service, cookies pop up. Making sure it's if you have anyone from California ever viewing your website, making sure it's compliant for California. Having that 80, the ADA plugins I mean all of these things. I have a business owner, family member, and he was actually. He's a small business, I think he only had eight employees, so he didn't even qualify for this ADA law the American Disabilities Act requirement that you have to make your website ADA compliant, friendly and he was sued by someone who said your website, you know he sells his, his one, the brand in question, they sell garments and bags. So he's being sued now by somebody who who is saying that your website, where you sell, you know, tote bags and like luggage tags and beach coverups, is not ADA compliant and therefore and I have a right to see this website and therefore I'm going to sue you While that lawsuit maybe would have been thrown out in court, wouldn't really?

Speaker 2:

She wouldn't have really got the damages she was looking for. You know, he paid out. He just paid 5K because he didn't want to deal with a lawyer he didn't want. He just got scared, he didn't really want to deal with going to court, because going to court and defending yourself is more expensive than just paying her off. But you know, then I looked her up actually and she had filed this against 20 small businesses. So when you're in business, people are going to try to exploit you and so, having taking a little bit of time and putting in the headache one and done, at least, of having basic contracts and setting up your business in a compliant way and having a compliant website I mean, these are the basic shields that you can do that can absolve you of having minor headaches that are almost guaranteed to happen if you don't do it.

Speaker 1:

So let's talk a little bit about intellectual property, because I feel like this is a big one right now with AI, and it's so easy to be able to grab video, to be able to pull anything, reshare all the different things. What steps should a business owner take to protect their intellectual property?

Speaker 2:

Sure, so I'll just give like a few sentence overview. Ip is going to, mostly for small businesses, fall into three, but mostly two, categories. The first one is patents. This is only going to apply to a small business owner if they're actually inventing something, such as a new technology or tool, chemical or you know new type of fashion item Like it's. You have to really invent something. Not most people, most businesses, are not creating something totally novel. Most businesses are selling a product or service that's already on the market.

Speaker 2:

So when, then, you're going to shift to the other two important types of IP, which are patent or, sorry, trademarks and copyright? Trademarks protect brands, so this is going to be any sort of element of your brand, so your name. So this is going to be any sort of element of your brand, so your name, logo, slogan, tagline, maybe your subscription lines, your membership lines, your course names, any design elements you might have or logos you might have those are going to be protected with trademarks, and if you have very specific packaging, you can get a trademark on your packaging as well, or a very specific color or something like that. You can get a trademark on your packaging as well, or a very specific color, something like that. You can get a trademark for that too, and then copyright is going to protect your content basically. So this is going to be anything like videos, music, photos, books, poems, literature, or you know software, architecture, things like that, so. Or you know patterns for fashion and things. So, when it comes to small businesses, obviously getting your brand name, logo, slogan, top best selling products if they have names for them, or membership lines, those things, getting those all trademarked yes, no brainer.

Speaker 2:

Having an LLC or domain obviously means nothing. If someone else gets the trademark for your name, they can just sue you and stop you from using it. So you never want to operate your business without a trademark, especially for your main brand name, because losing your domain, switching your main brand name, is the most expensive rebrand aspect that a small business can have, that they typically can't survive. So you know, that's just the reality of it. So trademarks are kind of a no-brainer and most people, I think, are starting to realize that Now.

Speaker 2:

When we talk about copyright, though, in AI, the reality is that you don't own any content that AI is making. So if your entire business model is predicated on things that AI has created, whether or not you can sell them and profit from them uniquely is still a gray area of law. And if you are doing that and that's your business model, then you are very vulnerable because anybody can recreate it, copy you exactly, rip you off and you really can't do anything about it. So if that's your business model, you know, hopefully you're not investing too much into it is kind of what I think you know.

Speaker 1:

Yes, no, absolutely. I think the big concern that a lot of content creators will have is that AI is able to pull pieces of their content and therefore it gets utilized by others. So I guess the real question that they will have is how do they go about getting us to stop? So, in other words, they have created a DIY painting tutorial that shows exactly what to do, and the steps with specific words are used in someone else's creation. That is not linking back to them or giving them any sort of credit. What do they have? Any steps that they can actually take to try to fight it?

Speaker 2:

So, depending on how similar it is, of course, this is going to be on, you know, very circumstantial and fact by fact basis, you may a lot. I will say. A lot of people come to me. A lot of people come to me and they think that they've been copied and they haven't. Um, I mean, there's an influencer who sued another influencer for having, you know, the same aesthetic. So, that aside, you know if you have a real case or not is on a case by case. But if you do have a case and somebody legitimately did copy you, then yes, you do have protection for that, because you can file either copyright violation requests on the platform, you can do DMCA, you can actually file a copyright registration and sue them in court, you can go to the Copyright Claims Board. So there's lots of options in that case. Yes, but that's predicated on the fact that you would have a real case, which one would you start with?

Speaker 1:

Which one's the easiest to first approach the GMC takedown?

Speaker 2:

Is that I would say most people have tried to report it within the platform themselves. They typically say the wrong things. So you need to actually be thorough and explain what's going on. I mean, when people go to an attorney, when people come to me, they don't even explain things properly.

Speaker 2:

But if you're going to an attorney or you're trying to file a claim whether it's a DMC or whether it's going just right on Instagram or TikTok and trying to file a copyright claim if you can't even explain why it's the same and you can't find your original content and you're just saying, oh, but they copied me. I mean, just be you know, be so for real, so that you have to actually fully explain why it's copying you. And if it's actually just little clips they've taken from your videos, that's obviously the easiest thing, or your music or whatnot. But you know, really you have to be able to explain kind of what's going on and if you do that, typically the platforms take it down and or you're you know you're going to be able to understand why they did it, because they'll kind of give you a reason why not. But most people who file those things they don't even file the form correctly. They don't take it. They just think they can do two clicks and it's done.

Speaker 1:

But that's not what it is yes and, of course, when it comes to the proof, if you have the raw footage video or photo it makes it much easier to be able to prove clearly, Right.

Speaker 2:

But there's something about people when they get copied that makes them feel in a very, I would say, entitled way that they don't need to give any real facts. And I'm saying this because we get hundreds of emails a week from people saying, hey, this person copied me, can you sue them or can you file this for us? Like you know, they don't even give us the link to their original video. They expect me to go on their Instagram page and find that video and then sit there and compare the two. And I'm a potential attorney who's about to get paid a couple thousand dollars to do some work for you. So I would have actually a little bit of motivation to do that. You know, three, two to three minutes of back work. I'm telling you that those people sitting in the Facebook offices do not have any motivation. So that is a huge problem. Is people really think that their content is so original, so unique, their case is so original and so unique? No, it's not.

Speaker 2:

You need to be extremely detailed and thorough. Imagine you are literally a lawyer, like explaining this to a jury, and what would that lawyer have to say? Present the fact, you know, give the real facts. So that's kind of like my biggest tip when you're dealing with this. Otherwise, you're just going to file a form incorrectly because you skipped writing three extra sentences, and then you're going to go pay a lawyer like me $3,000 to do it. I mean, you know, just just think you know that that three thousand dollars could be paid to a lawyer to get an additional couple of trademarks, which is a much better use of your funds. So you got. You want to think about it.

Speaker 1:

You know, pragmatically too, yes, no, I love that you gave very specific stops on how to make sure that they're doing it, especially through the platforms, because it is we just assume. We feel violated, we feel like taken advantage of, so it becomes. Well, I obviously created this and by providing that evidence it makes it much simpler for them to quickly take it down and quietly make it seem like it never happened. Very good, and can you tell us where are the best places to connect with you?

Speaker 2:

Sure. So LinkedIn, instagram, tiktok I would say TikTok no, because we you can't DM on TikTok, I think. Right, but I'm available. You know I'm really easy to find and then I think in my all of my links TikTok, linkedin, instagram you can book a call, like directly with an attorney and just fill out like the questions about what your case is about and you can get like I think it's either a 10 or 15 minute free call. So if you have any specific questions, like about your situation, you can always just book a call or email us or anything like that.

Speaker 1:

But I'm really easy to find yeah, excellent, we are going to make sure that we link to those in the description so that they can make sure that they connect with you. I appreciate.

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