Making it Legal — What’s in Your Toolbox?

Making it Legal — What’s in Your Toolbox?


If you’re a maker, you probably have a toolbox. If you’re a careful maker, you have some safety tools in that toolbox, like safety glasses and earplugs. Maybe you have rubber gloves if you work with chemicals. There’s another safety tool that makers should have at their disposal: a company.

“Company” is a word that garage-based makers might not want to be associated with. It may bring to mind large, facelesscorporations that care more about profits than innovation or creation. But the people who started these companies did it as a way to protect their owners and investors.

Just as you protect your eyes and hands with glasses and gloves, you protect your assets with a company. Companies give usthe concept of limited liability: a company’s owner is generally only liable for the amount that they invested in the company. This isan incredible protection, because no matter how careful you are, accidents happen.

Let’s say you design and sell remote-controlled lawn mowers. What if RF inter-ference causes the mower to go off course? Even if an accident isn’t your fault, someone may be injured or even die. We live in a world where no one likes to take responsibility for their actions, so they may come looking for you because your name is on it.

If you’ve made a company, a customer generally has to go after the company. Of course, there are some exceptions to this and some rules you have to follow to make sure this happens. A company is a person under the law, and though you control it, it isn’t you. That means the only thing someone can go after is what the company owns. So, while company-owned tools might be at risk, your house and your car may be protected.

Your company might be just you as the inventor, or you and some close friends who share an idea. If you have multiple people,the rules you set up on how you run your company can prevent arguments about how profits are shared, who gets to vote on important decisions, and how votes are counted.

There are lots of different kinds of com-panies, such as the traditional company, the LLC, and the S corp, and these vary depending on what state you live in. Forming a company isn’t that hard. In most states, it just involves filing a form and paying a fee.

While you’re not required to get a lawyer, there are many reasons to have one help you get started. A short conversation with a lawyer will help guide you to the right type of corporation for your business. A good lawyer will explain your options and offer to let you save money by filling out the forms yourself and give you assistance if you need it.

A business lawyer can also explain rules you can set up internally to avoid future conflict. The lawyer will tell you how to prevent someone going around your company to try to get to you. Most importantly, by consulting a lawyer now, you’ll establish a relationship with someone you can consult if something goes wrong or if you need some fast advice.

Protecting yourself with a company is the best legal safety tool you can have as a maker, and it should be in your toolbox.

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