So far during the pandemic, around 2.4 million women have left the workforce, numbers much higher than men.  Yet, in a small silver lining,  there have been a record number of new business applications filed across the country, according to the U.S. Census Bureau. Many of those businesses have been started by women, as a result of either job loss, the need for flexibility or childcare, or as an additional source of revenue.  Excited and sometimes overwhelmed (or is that just me?) founders could put their families and finances in jeopardy if they overlook some key legal considerations.  As International Women’s Day approaches on March 8th  I wanted to provide a resource to support all the new entrepreneurs (and mompreneurs) out there.

As a mom of three kids and former business owner, I completely get the insanity in all your households right now.  Whether you are taking conference calls in the car for some peace and quiet or jotting notes down on napkins left over from breakfast, I’ve got you covered.  Here are my top five handy and succinct tips to…sigh…add to your “to-do” list.

  1. Take the time to research local licensing laws relating to your business idea. Some common examples include: DBA License, General Business License, Sales Tax License or Direct Sales License
  2. Consider forming a business entity and/or securing insurance to protect your investment, home and personal finances. Though there is an upfront cost, forming a limited liability company (LLC) or corporation, as opposed to operating as a sole proprietorship or partnership, can help shield your personal assets.  Additional protection may be available through general liability, directors and officers liability or employment practices liability insurance policies.
  3. Determine whether to outsource certain tasks or hire employees. Consult the state law for the state in which the employee or contractor is physically located to determine whether you can bring a worker on as a contractor.  In California, I have written extensively about the difficulties and substantial financial penalties in misclassifying workers as contractors rather than employees. This is an area that frequently trips up new business owners looking to minimize payroll costs and administrative hassles, so do some homework before engaging workers or utilize tried and true vendors to establish a business to business (B2B) relationship.
  4. Establish contracts and procedures for vendors, clients and employees.  Speaking of B2B relationships, avoid disputes early on in these relationship by ensuring you have contracts that you understand in place. I recently helped a pair of young, female, entrepreneurs negotiate out of a bad contract with a distribution center that took advantage of their inexperience and held their product for ransom, crippling the new business venture.  You’ll want to include contract terms like recovery of collection costs and attorney’s fees in event of a contract default, how and when payments are due and in what state contractual disputes will be handled. You should also have paperwork in place for clients and employees, though I don’t favor employee contracts for any guaranteed term and recommend at-will offer letters whenever possible.
  5. Protect your work product.  You will want basic protections in place for vendors, contractors and employees that  cover non-disclosure and protection of your confidential information, which you get to define.  You can secure additional protection of inventions,  brand name/logos and creative works by filing with the Patent and Trademarks Office or Copyright Office. Anyone creating content, inventions or processes for your business should have “work for hire” language in their offer letter to ensure your company retains ownership of all material created.

I always love hearing from fierce and inspiring women so please reach out to me or another member of our awesome Labor & Employment team with any questions.