Episode 19: Keeping it Legal with James Decker
This is the second part of our business tax and legal series. Last episode, we spoke with CPA Renee Sneed. Today, we’ll be talking to James Decker, a lawyer based in the West Texas town of Stamford. He has an undergrad degree in agribusiness from Texas A&M University, and he graduated from Texas Tech’s school of law. He has practiced in his hometown of Stamford ever since. James provides advice to clients about business and property ownership, including agriculture, estate planning and probate, real estate, oil and gas, business and entrepreneurship. He’s also campaigning to be mayor of his town!
Setting up a business – first, what does a freelancer need to do to make sure they can legally operate in their area?
Think about your long-term goal for your business. James says the biggest mistake you can make is setting up your business like a hobby, running it like a hobby, then when you get successful, you have to backtrack to get your business running properly. Even if you don't feel ready to set up a corporation or an LLC, get a separate tax ID and bank account from your personal finances.
What type of business structure do you recommend, from a legal perspective? (sole proprietor, s-corp, LLC, etc).
Consult with an accountant for the best kind of structure for your business. That will drive what type of entity you should choose. Some other thoughts:
Ask yourself: Do I want to have a separate entity? A sole proprietorship is not a business entity, you are simply operating under your own name. Cons: You have no liability protection. Meaning, if something happens while doing business, and you get sued, your personal assets are at risk. So consider what kind of risks you could encounter while operating your business. Could someone sue you over an article? Are you at risk for an accident happening while you’re working with a photography model? These are things that could potentially impact your business, and if you’re a sole proprietor, your personal finances.
A corporation or an LLC offer a separation between your personal assets and your business.
S-Corporation - A corporation with a simplified tax structure. This can be best in certain cases, but it's best to discuss this with an accountant.
LLC - an entity with a simplified tax structure. if you don't need an s-corp for your particular business, this is probably the simplest structure you can choose because there isn’t additional taxation.
No matter what entity you choose, consider your personal finances and what your goals are for your business before you decide.
What -- if any -- kind of insurance you need to cover your business? Does your homeowners' cover it?
Consider some general liability insurance. James says this can protect you against some common risks freelancers encounter, and the cost is minimal for the coverage.
Check your policy and talk with your insurance agent to see if your homeowner’s insurance covers your business risks. It may not, but you could possibly add on more coverage.
What are some of the most common legal issues you’ve seen freelancers encounter?
By far, it is questions about intellectual trademarks: Copyrights and trademarks.
3 types of intellectual property:
1. Patents – not important for freelancers. It’s a process or product you’ve created, like a machine.
2. Copyrights – an original idea: words, audio, video, software. Example: a McDonald’s jingle or ad.
3. Trademarks – a unique mark, a way you sell goods or services: a logo, a design. Example: the McDonald’s golden arches
Biggest advice – don’t use other people’s intellectual property. If a reasonable person can look at your work and someone else’s that was created first and see a connection, it’s an infringement on their trademark.
Make sure your work is original work. And make sure you protect your work.
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So how can you protect your writing and photography work?
It’s very simple. You can go through the formal process of registering a copyright – it’s not too difficult or expensive. If you’re writing something that will have widespread exposure, you might consider doing that process.
To copyright your work informally, James says you simply need to mark the page or the caption on Instagram/youtube, or your meta data on your photo “Copyright (insert name of the author/photographer) (year it was copyrighted).” This is enough to claim your copyright on that text, audio or photo in most cases.
It won’t stop people from trying to steal your work, but you will at least have a place to start from if somebody does steal it. You can send a letter from a lawyer saying it is your copyright, and you can get them shut down from using it.
Who owns your work? Two scenarios:
If you write a piece, it gets published, and you get paid for that completed article, you own the rights to that story. UNLESS your contract specifies otherwise. Particularly…
Work for hire – If a contract says “work for hire” that means the company that hired you owns the copyright, not you the freelancer. So if you write a big story, but it was written as work for hire, you cannot re-sell any part of that story for another publication.
Make sure you understand if the work you are doing is work for hire, or if you own the copyright. This should be spelled out in your contract!
What should a photographer do if they find someone is using their photos without permission?
This happens all the time! If someone is using your photos without your permission, send them a written letter telling them to stop. You can pick up a form cease and desist letter or have a lawyer draft a letter for you at minimal cost. Send it certified mail, or by email—James has even sent them as Facebook messages before. If it’s a magazine that published your photo under someone else’s name, you can first contact the other artist, and then contact the magazine to let them know the error and ask for a retraction.
DMCA – This act updated the copyright law for the digital age.
Avoid using Google images from other people in your work—be sure to work with the photographer who took the photo to get permission when gathering images. A better option – reach out to photographers to find new photos!
What about written copy?
You can do the same process as with a stolen photograph. Gather a screen shot or photo of the plagiarized text as well as your own to have proof when contacting the offender.
Don’t get mad and rail at the offender in a comment on facebook or on a blog. Don’t act rashly. Take a deep breath, act professionally, and send a formal letter to cease and desist using the text or photo.
At what level do you pursue legal action for non-payment? Over $500? Over $1,000? Is there a statute of limitations on time?
Laws can vary from location to location, the amount of money at stake and amount of time that has passed. Don’t let too much time pass—give the client time to respond with your payment, but don’t wait years to collect. Consider how much the money lost will affect you when making a decision to pursue payment.
The other thing to consider is the location of your client. If the client is out of state, it can be hard to pursue a small claims court case in their town. Still, send a demand letter, send one from a lawyer if need be, and be persistent. Don’t send one bill and forget about it. Keep sending statements and bills.
What is the importance of contracts for freelancers? – either for work with magazines, portraits, commercial, etc. Where can freelancers find out what info they need to include in a contract?
A simple contract for photography or journalism does not have to be complicated, but it does have to be written down. Make sure everything you agree to do is included in that contract, or it won’t be enforceable in a dispute.
You may be able to find photography contracts in groups or photography sites, which can be a good jumping off point. But ultimately, talk with a lawyer to look over your contract to make sure it fits your needs.
If a company gives you a contract, you say you’re going to have a lawyer look at it and they say it was approved by their lawyer—you should still have someone looking out for your interests take a look. Don’t assume that lawyer was looking out for you.
What should be included in a contract to help it hold up if taken to court?
The contract needs to be definite: Who is involved, what does it cover, how do we get paid, how long does it last, and what happens if something goes wrong?
Be cautious about arbitration clauses. This is a private court system that may be difficult for you to press your case, instead of taking the company to court.
Looking back over our conversation, do you have any advice for freelancers about protecting themselves from these legal issues? Or perhaps reducing liability worries?
It’s a lot easier and cheaper to set things up right before hand, than cleaning up a mess after the fact. Hire good people: Lawyer and CPA. You don’t have to break the bank, but you need the expertise of these professionals to navigate the tricky business side.
Run your business like a business, not a hobby—right from the beginning. Even if you’ve been a business for a while, think about how you can get your business fully legal.
Anything else you’d like to add?
Make sure you find good folks to help you!
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About The Freelance Remuda
The Freelance Remuda is a podcast about navigating the equine media frontier. Co-hosted by seasoned freelance professionals Abigail Boatwright and Kate Bradley Byars, the podcast explores the trials and triumphs surrounding life as a freelancer in equine media, while sharing valuable tips from equine media editors and creatives doing what they love. Find and subscribe to the podcast on iTunes and Stitcher.