When starting a small business there are many considerations and decisions to make about your business, least of all the insurance coverage and legal contracts or documents you need as well. Depending on your business you are starting, you may start with a sole proprietorship structure or have already visited a lawyer and incorporated your business.
Regardless of your business structure there are some standard insurances and legal contracts/policies that are important and required for your business.
Connect with our local Insurance Brokers and Lawyers from our Referral Partner network.
- Business Size Doesn’t Matter Privacy Does – Maintaining privacy can be challenging, both in terms of ensuring it and obtaining it. This applies not only to determining what information to disclose but also to deciding what information to gather.
- Cyber Security – Learn the simple steps to protect yourself and your business online.
If you are a graphic designer freelancing, you would want to ensure you have protected your intellectual property you have created and if you are handing over those rights to the business you are providing the service to. A service agreement would need to include what rights you are granting or licensing to them and what rights they have with that body of work. To protect your interests you want to research the company you will be working with, ask for a non-disclosure agreement and use a watermark on your images. In addition you also need to include:
- Defining your responsibilities and expectations of the client and how to deal with issues that may arise
- Your fees, if you will charge late fees, forms of payment and any ancillary costs (software, digital images)
- The start and end date of the contract and important project dates & milestones
- Length of any confidentiality or NDA terms
- If the contract extends, changes or renews
- When, how and at what intervals you will provide invoices to the client.
- If you can use the work you created in a portfolio and how the customer can use it
Independent Contractor Agreements
Your first hire may more than likely be a sub contractor or independent contractor and you will want to protect yourself from unforeseen roadblocks, obligations or if there are any intellectual property rights that you need to keep. These agreements define the business relationship between yourself and the contractor you hire. It details the scope of work to be undertaken, the fees and service details, the tax liabilities as well as who is responsible for different aspects of the work to be undertaken.
Confidentiality / NDA Agreements
These agreements are essential if you are sharing any trade secrets or data about your business with potential investors or suppliers. Without this agreement there is no obligation for confidentiality and leaves you and your business legally vulnerable and exposed.
If you are entering into a business partnership, get a partnership agreement. This can help outline the responsibilities of the partners, the percentage of ownership, how you divide revenues and losses as well as deal with resolving any conflicts should they arise.
The term Intellectual property (IP) covers original ideas, designs, discoveries, inventions and creative work produced by an individual or group. In the digital age it has become a challenge to protect your assets.
Protecting your Intellectual property is important to ensure your work is not stolen or copied.
Protecting your business name – If you want to safeguard your business name, registering it as a trademark is the most effective way. However, name registration only provides protection against other businesses in Ontario using your name, while trademark registration secures your name across Canada.
Trademark Search – make sure the name you’ve chosen is not already trademarked!
Naming Your Business – choose the name for your business carefully. It will precede you wherever you go!
Insurance and Bonding – there are a number of different types of business insurance you need to consider for your small business. The right type of business insurance can provide peace of mind in both your personal and business life.
When you drive a car you are required to have insurance. Even when you own a home, even if you don’t have a mortgage, you would still want to protect that huge investment. But with a business, many wonder if they do in fact need insurance. The easiest way to put insurance into perspective is to remind you that “Anybody can sue anyone, for anything.” Even if you are pulled into a frivolous lawsuit, it will take thousands of dollars in legal fees just to get yourself cleared from the suit.
Here is a brief overview of some of the different types of business insurance to consider:
Commercial General Liability (also known as CGL)
It has been nicknamed “slip and fall” insurance because it provides assurance that if anyone comes onto your property, like a customer or delivery person, and they are injured, the policy will be called into action. Helping both in legal fees, as well as court ordered damages that have to be paid out. This type of insurance can also extend to contents/equipment/stock coverage which can sometimes be substantial and could put you out of business if you ever lost your entire inventory and all your equipment in the event of an insured loss. Additional extensions of coverage include non-owned auto and coverages for the building itself, if you own it, and Tenant’s Legal Liability if you rent. If you sell a product or service, CGL is your foundation of insurance.
Errors & Omissions (also known as E&O)
In business, this type of insurance is essential if you offer a professional service or give advice.
A third party can hold you liable for financial loss if they based their actions on your advice. Most think of Doctors, Lawyers, Financial Advisors, and Insurance Brokers as a few of the industries that fall under this but consider if you advise clients. More and more Life Coaches, Marketing and PR Companies, along with Personal Trainers and Aesthetic services, realize that their work with clients opens them up to the possibility to lawsuits with their advice and services.
It may be a nightmare to face a computer hacking, where all your data is ransomed or deleted, and the amount of money to try to put your business back in order is staggering. But, consider the even larger horror if you have any customer data. Your customers’ info is precious and they can certainly sue you if you have not protected them. Never assume that cyber-attacks only happen to huge companies, hackers are well aware that small businesses are an easier target as they prove to be the most vulnerable. Also, with more and more people working from home and sharing devices (with their family members) the exposure is greater than ever.
Directors and Officers (also known as D&O)
Charities and not-for-profits as well as corporations are well aware that they need to protect their Directors. If Directors make decisions that impact the members, shareholders, or partners negatively, they can be held liable as wrongful acts. Without D&O, lawsuits can extend to the Board of Directors’ personal assets.
Offering products and services, giving advice, and making decisions on behalf of groups, opens all businesses up to potential risks and the right insurance can make the difference between assurance and uncertainty. Talking with a broker is a good first step, and remember, insurance quotes are always free!