If you start a sole proprietorship or a partnership, you could be held personally liable for almost anything related to the business; that means you will be responsible for paying any business-related debts you incur and you could be sued by your clients, employees, etc.If you start an LLC, you'll have some degree of liability protection. These business structures allow your business to be treated as if it were an individual of its own. The business itself can take out a loan, incurred debt, and be the target of costly lawsuits - reducing your personal exposure to these financial risks.

Establish an LLC (limited liability company) or a Corporation

New business owners are tempted to fund the business themselves, even if they don't have the savings to cover those expenses. They take out personal loans, max out their credit cards, or incur debt in other ways to get the money they need.A few minor expenses here and there won't hurt you, but for the most part, you should never take out personal loans. Instead, work with investors, tap into your savings, or rely on your business credit to take out loans in the business's name.

Never Take Out Personal Loans

<ul><li>Budgeting and frugality: Be smart with your budgeting and try to remain as frugal as possible.</li><li>An emergency fund: Set aside at least enough money to cover a few months of personal expenses.</li><li>Tax-advantaged investment vehicles: With any extra money, use tax advantage investment vehicles to maximize your savings and plan for retirement. </li></ul>

Focus On Independent Saving Strategies

Try to diversify your income streams, both inside the business and on a personal level.<ul><li>Within the business, that could mean selling multiple different types of products and services, monetizing your content or applications in different ways, or even targeting different audiences. </li><li>The same principle applies to you as an individual. You can diversify your income streams by investing in dividend-paying stocks, investing in real estate, starting independent blogs or websites, or even picking up side gigs.</li></ul>

Diversify Your Income Streams

The right strategies can help you minimize your personal financial exposure when starting a business.

Stashed ideas

The 4 Most Important Ways for Entrepreneurs to Mitigate Personal Financial Risk

You’ve got a great idea, maybe the next killer app. You launch, and the next thing you know, you’re wrapped up in a legal battle because, much to your surprise, one small component of your product uses technology that has been patented by someone else before you.  Whether you're protecting your product or protecting your company from infringing on someone else's, you must factor precautions into any product strategy.

Understanding IP protections

Trademarks protect symbols such as words, phrases, logos and other visual identifiers that represent a brand or product. This can also include sounds, colors and building designs. Think of things like the MGM lion roar, Barbie pink and a Burger King restaurant. Trademarks are primarily used to ensure the uniqueness of a brand's identity, which builds consumer trust.

Trademarks

A patent protects a novel invention, including a design process or physical product. Patents are time-limited, typically for 20 years. They create monopolies for patent holders. When creating a product, process or design, it's important to determine if you could be infringing on an existing patent. Otherwise, you risk legal repercussions, even for inadvertent infringement. An attorney is needed for patent search and creation.

Patents

A copyright gives the holder exclusive rights to distribute, duplicate or recreate original works of authorship, which can include things like visual designs, software, graphic designs, web content and more. Unlike other IP protections, however, a copyright holder cannot successfully sue someone that has independently or inadvertently created the same or very similar work.

Copyrights

Trade secrets are meant to protect internal technology and processes that bring value to your business, and that would give others advantage to your detriment were they given access to such resources. Unlike a patent, trade secrets are not registered.Protection is typically established through non-disclosure obligations in contracts (like NDAs, employment contracts and partnership agreements).

Trade secrets

This could be the result of a lack of awareness of the risks of not establishing protections.Patents, for instance, are not cheap to register, and not everything is patentable. Some founders don't consider the intangibles of what they are building. It's crucial to ensure differentiation of what your product or service does, how it functions, and how it's presented. Those differentiators can make or break your business and must be protected.

Why might some founders neglect IP protections? 

Whether you're protecting your product or protecting your company from infringing on someone else's, you must factor precautions into any product strategy.

The Basics of Protecting Your Intellectual Property, Explained

Intellectual property is a broad categorical description for the set of intangible assets owned and legally protected by a company or individual from outside use or implementation without consent. An intangible asset is a non-physical asset that a company or person owns.
The concept of intellectual property relates to the fact that certain products of human intellect should be afforded the same protective rights that apply to physical property, which are called tangible assets. Most developed economies have legal measures in place to protect both forms of property.

Intellectual Property: A Primer

Companies are diligent when it comes to identifying and protecting intellectual property because it holds such high value in today's increasingly knowledge-based economy. 
Also, producing value intellectual property requires heavy investments in brainpower and time of skilled labor. This translates into heavy investments by organizations and individuals that should not be accessed with no rights by others.

The Idea Behind Intellectual Property

A patent is a property right for an investor that's typically granted by a government agency, such as the U.S. Patent and Trademark Office. The patent allows the inventor exclusive rights to the invention, which could be a design, process, an improvement, or physical invention such as a machine. 
Technology and software companies often have patents for their designs. For example, the patent for the personal computer was filed in 1980 by Steve Jobs and three other colleagues at Apple Inc.

Types of Intellectual Property: Patents

Copyrights provide authors and creators of original material the exclusive right to use, copy, or duplicate their material. Authors of books have their works copyrighted as do musical artists. 
A copyright also states that the original creators can grant anyone authorization through a licensing agreement to use the work.

Types of Intellectual Property: Copyrights

A trademark is a symbol, phrase, or insignia that is recognizable and represents a product that legally separates it from other products. 
A trademark is exclusively assigned to a company, meaning the company owns the trademark so that no others may use or copy it. A trademark is often associated with a company's brand. For example, the logo and brand name of "Coca Cola," is owned by the Coca-Cola Company (KO).

Types of Intellectual Property: Trademarks

A franchise is a license that a company, individual, or party–called the franchisee–purchases allowing them to use a company's–the franchisor–name, trademark, proprietary knowledge, and processes.
The franchisee is typically a small business owner or entrepreneur who operates the store or franchise. The license allows the franchisee to sell a product or provide a service under the company's name. In return, the franchisor is paid a start-up fee and ongoing licensing fees by the franchisee

Types of Intellectual Property: Franchise

A trade secret is a company's process or practice that is not public information, which provides an economic benefit or advantage to the company or holder of the trade secret. Trade secrets must be actively protected by the company and are typically the result of a company's research and development.Examples of trade secrets could be a design, pattern, recipe, formula, or proprietary process. Trade secrets are used to create a business model that differentiates the company's offerings to its customers by providing a competitive advantage.

Types of Intellectual Property: Trade Secrets

Attached to intellectual property are certain rights, known as Intellectual Property Rights (IPR), that cannot be infringed upon by those without authorization to use them.1 IPRs give owners the ability to bar others from recreating, mimicking, and exploiting their work.Patents infringement occurs when a legally-protected patent is used by another person or company without permission. Patents filed before June 8, 1995, are valid for 17 years, whereas patents filed after this date are valid for 20 years. After the expiration date, the details of the patent are made public.

Intellectual Property Infringement

Many forms of intellectual property cannot be listed on the balance sheet as assets since there aren't specific accounting principles to value each asset. However, the value of the property tends to be reflected in the price of the stock since market participants are aware of the existence of the intellectual property.Some intangible assets are recorded as property, such as patents because they have an expiration date

Special Considerations

Generally, the creator of a work is deemed its owner. However, intellectual property ownership can be determined differently for different types of property and under varying circumstances. 
For example, if work is created for an employer, the employer is the owner of that intellectual property. Also, ownership rights can also be transferred to other parties.

Intellectual Property Ownership

Intellectual property can be used for various reasons, such as branding and marketing, as well as to protect assets that give a competitive advantage.

Intellectual Property Usage

Intellectual property is a set of intangibles owned and legally protected by a company from outside use or implementation without consent.

Intellectual Property

Layer 1 blockchains, aka L1, are focused on foundational elements like consensus & validation. L2 are chains built on top focused on scaling & speed.Balaji makes the argument that L0, or the ideas in people minds, the ideology they adhere to, is the most important layer. Because the ideology enables the technology.Think of the L0 as the mental software that runs on our brains. It manifests in the laws we pass and those are influenced by philosophy of each individual.

L0- the legal layer

In the world word you had a few players, major newspapers & academia that dictate the news. Social media was an advancement but because they are centralised, the old forces put pressure on the management of companies like Facebook to align to the dogma through censorship.The solution is to evolve to decentralised social networks. Free, censorship resistant platform are important for changing the laws.

From centralised to decentralised media

<ul><li>Focus subnational & international: thinking about nations is not enough. Focus on specific states, cities, or think globally.</li><li>Gain internal alignment first. Rough consensus over the future and avoid petty Twitter fights.</li><li>Write legislation: it's time for developers to start writing the code of the laws.</li><li>Focus on distribution</li><li>Get the attention of politicians and get small steps fwd: make Bitcoin legal tender or support DAOs.</li><li>Be globally mobile: Rent instead of buy, no Lambo, live so you can move at any time if the state turns against you.</li></ul>

How to change the crypto laws

The biggest barrier to the decentralized crypto future is opposition from the government. Balaji proposes we take this seriously and think of it as Layer 0.

Crypto

Balaji Srinivasan on the legal layer (at Solana Conf 2021)

Content created in one medium can spark a variety of spinoffs. For example, "Hustlers" (2019), "Blue Crush" (2002), and "Fast and the Furious" (2001) are all movies inspired by articles first published in the New York Magazine, Outside, and Vibe. The right to turn those articles into films and who gets paid for it stems from the copyright. You don't need to keep the rights to everything you produce. Still, understanding copyright and developing best practices can allow you to revisit your work in podcasts, books, and other media.

The importance of copyright

<ul><li>Copyright protects the creator of an original work of art, such as images, visuals, literary works and any other type of expression.</li><li>Copyright doesn't protect ideas but how the ideas are expressed - for example, text choices, visual decisions, or movement choices can have copyright protection.</li><li>Copyright automatically belongs to the creator unless otherwise specified by a contract.</li><li>Copyright also covers how the work can be displayed, reproduced, and distributed, including any work derivative.</li><li>Creators tend to build an Intellectual Property Portfolio of copyrights of all their works.</li></ul>

What "Copyright" means

The copyright of any work produced automatically belongs to its creator. Clients, brands, magazines need permission from the creator to use the work, but they tend to hold more power and leverage and typically look out for their own best interests. The copyright section in a contract is often transferred to the employer in exchange for what they are going to pay you.

Why brands/clients want your copyright

There are two strategies to protect your IP Portfolio:<ul><li>License your work. Instead of signing over the copyright, a creator can license the use of their works for a set time (2 years, 5 years, etc.) The client can still use the work, but the right to the work will remain with the creator, allowing them to continue gaining from their work after the license expires.</li><li>Limit the use of your work to a specific medium. For example, stating in the contract that an article can only be published in a digital format.</li></ul>

The 4 Most Important Ways for Entrepreneurs to Mitigate Personal Financial Risk

The Basics of Protecting Your Intellectual Property, Explained

Intellectual Property

Balaji Srinivasan on the legal layer (at Solana Conf 2021)

How freelance writers can protect their copyright — and why it matters

It's time to

READ

LIKE

A PRO!