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Once I decided to pursue St. Stephen’s Project as a business (rather than a hobby), I set out to learn what needed to be done to comply with the law and protect myself, my work, and my business. After consulting with several lawyers and accountants, calling various government agencies, and comparing multiple service offerings, I organized my notes in the section below. This is not an exhaustive list (I, too, am learning as I go!); the intent is to help you jumpstart your entreprenerial journey so that you don’t waste weeks aimlessly researching (and being in denial about what the law REALLY requires) like I did! It may feel like a lot, but remember there are professionals that you can outsource to, tools that can help, and rewards that make it worthwhile. You got this! :)

Register your business. The first step is to decide on a business name and structure. Setting up an LLC helps you avoid personal liability for your business but comes with additional costs and reporting requirements that vary by state. Creatives often transition from a sole proprietorship to LLC once their annual income exceeds $40k for the tax benefits. This industry survey provides valuable insight into projected incomes of surface designers on a hobbyist, part-time, and full-time basis. A lawyer or accountant will be able to make a recommendation for you based on the scale and activities of your business. Accountants can usually set up an LLC for about $350 and lawyers charge between $500 - $850. Business registration requirements vary by state and are usually spelled out in the State Government’s website. In Texas, for example, if you’re a sole proprietor conducting business under a name other than your legal name, then you need to file an assumed name certificate in each county that you conduct business. Visit your County Clerk office’s website for the application, fees, and to check name availability.

Apply for business licenses and permits. Look up the licensing and permit requirements for your business at the federal, state, county, and city level. This is a great place to start. If you have a home office, make sure it conforms to local ordinances and zoning requirements and that your business activities do not conflict with or fall outside of the scope of your homeowners insurance. If you sell tangible personal property or taxable services, you will likely need a Sales Tax Permit from the Comptroller’s Office of your state. Some states, like Texas, include digital art as tangible personal property. You are required to obtain the permit and report sales tax even if the tax is collected on your behalf by third party merchants like Etsy or Redbubble. You should also understand how Resale Certificates work and when you need to request/furnish it. If you sell in multiple states, you may want to consider investing in a sales tax tracker that helps you determine whether your sales activites exceed the threshold for establishing economic nexus in states where your business has no physical presence.

Apply for an FEIN. It’s quick, easy, and free. If you set up an LLC through an accountant or lawyer, this step is usually included as part of the package. Sole proprietors have the option of doing business with their SSN, but you may still want an FEIN for W-9 purposes to reduce your risk of identity theft. Some banks also require it to open a business bank account. Apply for an FEIN online here.

Separate your personal and business assets. This makes for easier accounting and offers potential tax benefits and legal protection. As a sole proprietor, you have the option of simply opening a separate personal bank account and using it for your business. However, Business Checking Accounts typically come with extra business-friendly features such as same-day deposits. Chase* routinely offers bonuses to new checking account customers. Note the minimum requirements to avoid monthly service fees and the documents you need for account opening.

Separate your personal and business expenses. I am a huge proponent of charging everything to credit cards for the rewards and extra protections that are not available to cash or debit card transactions, PROVIDED the balance is paid in full every month. As a sole proprietor, you have the option of using either a consumer or business credit card for your business. Consumer credit cards offer more protections, but business credit cards allow you to build credit for your business and offer business-friendly features such as free employee cards. I currently use Capital One Quicksilver* for my business because it has no annual fee, gives 1.5% cashback on all purchases, and offers a decent sign-up bonus. It also provides the option of merchant-specific virtual credit card numbers, which is advantageous given the number of merchants and subscription services that are involved in running a business. Not only do the virtual numbers make your account more secure from hackers, it gives you control over when each card gets charged as they can be individually locked and deleted from your account.

Protect yourself online. If you have a website, you need these three legal pages: Privacy Policy, Disclaimer, and Terms and Conditions. Some clauses within these pages are must-haves, while others are specific to your online activities. Yet regardless of the nature of your website (blog, store, portfolio, informational etc.), you need all three pages to protect yourself from lawsuits and fines. After comparing four sources of lawyer-prepared templates, I decided on this one* that contains all the necessary clauses (and more) at the most affordable price. The templates were easy to customize and customer support responded to my questions within a day. You don’t want to copy these pages from someone else’s website because (1) they may not be customized to your business and (2) it’s intellectual property theft! Plus, once you purchase this bundle* you will be in the loop for updates whenever relevant law changes, so you don’t have to keep track. Beware of sites that sell you the bare essentials at a super low price ($69 for a legal bundle?) then upsell other basic clauses (e.g. affiliate disclaimer, third party data analytics etc.) for an extra $119! Make sure that the price includes free LIFETIME updates as well (if they only offer “free updates,” it’s likely only free for the first year). I have the Starter Legal Bundle*, but you can pay more for the comprehensive bundle that includes additional templates that may be relevant for your business e.g. terms for sweepstakes, guest blogger agreement, media release contract etc.) In addition to adding these legal pages to your website, don’t forget to enable the Cookies popup plugin offered by your website builder (e.g. Squarespace, Wordpress etc.) to give visitors the option of opting out.

Protect your business. If you provide services, professional liability insurance is recommended to protect your business from negligence claims and failures to perform. If you sell products, especially in high-risk niches (e.g. nursery products), you’ll want product liability insurance. Workers’ compensation insurance is required before you hire your first employee. Property insurance protects business equipment and inventory. Business interruption insurance compensates for lost income from interruptions due to catastrophic events, whereas disability insurance protects your income in the case of interruptions due to illness or injury. An insurance broker or lawyer can advise on the appropriate insurance policies for your business.

Protect your intellectual property. For most of us, this extends to copyright and trademark. Copyright relates to original content like paintings or writings. Trademark relates to your business identity such as trade name, logo, and slogan. Although copyright automatically vests upon creation, registration with the U.S. Copyright Office is required to seek enforcement through the court. The timing of your registration impacts your eligibility for certain statutory damages and reimbursement of attorney’s fees, and the nature of your work (how many authors, whether it is work for hire, or whether it’s been made available for sale) determines the fee. Copyright registration is simple and most creatives do it themselves, but I hired a lawyer for my first registrations and to serve as a sounding board for my future DIY registrations. Not all work is suitable for copyright registration and you do not get refunded if your registration is denied, so having a lawyer on retainer is a worthy investment. Trademark registrations, on the other hand, is a much more involved and complex process that is best done through a lawyer. The lawyer will conduct conflict checks and advise on the appropriate classes to file under. Make sure their fee sees you through the end of the registration (includes responses to office actions.) Due to the cost associated with trademark registrations, it usually only makes sense after you’ve accumulated sufficient equity in your brand. The rate of success of your application will also be higher with more years in the business.

(Last edited: September 2, 2021)