• Seek legal counsel. Before entering into any partnership or collaboration agreements, seeking advice from a qualified attorney with experience in contract law and business partnerships is always beneficial. An attorney can help you understand the terms of the agreement and ensure your rights and interests are protected.

Hiring and managing employees

Lesonsky: What about employment law? What legal considerations are important for entrepreneurs when hiring and managing their teams?

Moore: When hiring and managing employees, it’s crucial to be aware of employment laws and regulations in your state, and I always recommend that you create an employee handbook. In addition to the handbook, create comprehensive employment contracts outlining employee rights and responsibilities. Be sure these are up-to-date and legally compliant. If you ever have a question, be sure to consult with legal counsel.

Lesonsky: What happens when disputes or conflicts arise? What legal mechanisms are available for resolution?

Moore: When you own a business, disputes and conflicts are bound to happen. There are some strategies I recommend using to resolve your disputes as simply as possible:

• Get everything in writing. I know I’m repeating myself here, but by doing this, you can avoid some conflicts because the terms will be outlined in your contract.
• Communicate with your business partners, clients, and employees so you can address any issues before they become problems.
• Document everything. Whether you are making changes for a partnership or hiring an employee, be sure to document everything.
• Keep good legal counsel. Speak to an attorney who can assess your situation and provide legal guidance.

Protecting your business

Lesonsky: Let’s talk about other ways business owners can protect themselves. Can you explain the difference between copyrights and trademarks?

Moore: Both trademark and copyright are forms of protection for intellectual property, and each has its own advantages and limitations. Although the kinds of things that may be protected and the type of protection you can expect may overlap, it’s important to understand the differences.

Trademarks, registered or not, are phrases, symbols, or designs used to represent certain goods or services and distinguish them in the market. This broad definition means there are plenty of options for a trademark—companies have trademarked particular colors, smells, and even the shape of a bottle (Coca-Cola).

Since a trademark depends on context, elements normally ineligible for copyrighting can be trademarked; the Apple trademark is a good example. While an apple cannot be copyrighted, its artistic representation can be—its use as a symbol for an electronics and software company is protected as a trademark. Trademarks may be registered with the U.S. Patent and Trademark Office (USPTO), and doing so may lend additional weight to a legal claim, but a trademark may be protected even if it is not registered.

While copyright is in some ways similar to trademark, its intended use is quite different. Copyright applies to original works of creativity, such as musical compositions, novels, paintings, software code, and more; it protects the rights of the author or current owner of the work. Whoever holds copyright has the exclusive right to reproduce the work, make derivative works, distribute it, or perform it publicly. Like trademarks, copyrights may be registered—in this case, with the U.S. Copyright Office. While registration has its advantages when a copyright infringement claim has been filed, works are protected by copyright even if they are not registered.

Lesonsky: And what about trade secrets?

Moore: A trade secret is a type of intellectual property that refers to confidential information that provides a competitive advantage to its owner. Unlike patents, copyrights, or trademarks, trade secrets are protected without registration or formal process. Examples of trade secrets include formulas, processes, techniques, designs, patterns, or compilations of information that are kept secret within a company to give it an edge over competitors.

AI legal considerations

Lesonsky: What are the legal implications for small businesses using AI?

Moore: AI technology is still quite new and has only been part of public discourse for a few years. The legal system always lags behind technological advancements; AI is no different, so lawmakers are only beginning to address questions about liability and regulations. What is clear, however, is that existing intellectual property, privacy, and data protection laws still apply. Intellectual property violations, such as copyright infringement, are big potential legal risks depending on how your business uses AI. If your business relies on AI to create content and generate images or video, it’s smart to have everything AI-made reviewed by a human who can assess whether the AI creation relies too heavily on existing and legally protected works.

When a business uses AI as part of a product or service, existing customer data protection and privacy rules apply. If, for example, your business is part of the healthcare industry, your AI tools may be subject to HIPAA and other patient privacy laws. This means it is essential to understand what data is being collected and how that data is used, stored, and protected.

Legal tips for new startups

Lesonsky: What are the first three legal acts a startup entrepreneur should take?

Moore: The first legal activities should be to:

• Register your business formally—Establishing your business entity is crucial for legal and financial purposes. Depending on your jurisdiction and business structure, this could involve registering as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure has its own implications for taxation, liability, and governance.

• Contracts and agreements—Drafting and executing various contracts and agreements helps define relationships, protect interests, and minimize risks.