For the last 20 years UpstartLegal.com Founder John Gerber has worked with startups and growing companies, both as outside council at big law firms and as inside general council to growing businesses. In April 2010 he launched an online legal business document service for a new client base that had grown along with the unemployment rate. He called these displaced workers “entreprofessionals.”
Entreprofessionals can be writers, designers, app developers, financial advisers, lawyers, consultants, accountants, engineers, architects, marketing or PR professionals. “They’re sometimes people who don’t even think of themselves as entrepreneurs, but what they’re doing is…incorporating their own job so they can provide their services to the world,” said Gerber. “I say that in contrast to people who are doing more traditional startups, where they’re building products or services that are scalable and that will grow beyond the person who is actually out there delivering the work.”
When an employee becomes a business owner, the paperwork becomes more complex than just filling out a W-4 and waiting for a paycheck. Gerber recommends that most independent contractors form a Limited Liability Company, or LLC, which, according to his website, is “easier to manage than an S-Corporation,” doesn’t require businesses with one owner to file a separate tax return with the IRS and offers “flexibility if you are going to raise money or add other owners.”
Even freelance writers, who typically don’t need to form LLCs, can still face legal difficulties when they work from home. In Gerber’s experience, freelancers get in trouble when “they say, well I’m ‘just’ an entreprofessional, or I’m ‘just’ a freelancer – I don’t really have risks in what I’m doing,” he said. “As a result, they start doing their business without a contract…Where I see the problems most frequently are when there’s a difference in understanding between what the service provider believes he or she is supposed to do and what the client believes he or she is supposed to do.”
Gerber’s business sells document packages that include every form he feels entreprofessionals need to register as a business, create a clear scope of work and clarify expectations between the contractor and the client. There are seven documents that are especially helpful in starting a new company:
1. Limited Liability Company Formation
2. Federal and State Tax ID Number Registration
3. LLC Operating Agreement
4. Services Agreement that covers Ownership of Work and Limitations on Liability
5. Non-Disclosure Agreement for reciprocal obligations in sharing confidential information
6. Subcontractor Agreement for Third Parties
7. Referral Agreement for paying clients who refer business to you
While most of these documents are available on government websites, the UpstartLegal package also includes professional proofreading and a round of revisions to make sure that the documents are filled in completely, as well as a “startup checklist” with advice on non-legal issues for businesses including space, finance, technology, insurance and marketing. The files can be edited and reused for multiple clients.
“You could…figure out how to form an LLC and do it yourself,” Gerber said, “but you’d be relying completely on yourself. My experience is that people have a great deal of fear and uncertainty when they have to do that.” His service is intended for individuals who don’t have business backgrounds and want to save time.
Gerber founded and funded UpstartLegal himself. “Fortunately,” he said, “the startup costs are fairly controllable and minimal.” To build the website Gerber hired two entreprofessionals: designer Kevin Ferko of No.2Pencil in Philadelphia and programmer Alan Boris, who is also located in Pennsylvania. “I highly recommend both of them,” he said.
Gerber said the site has gotten a positive response from users. “One of the clients wrote back to me and he said, ‘painless.’ And that made me feel really good.” The process of opening a business causes many of his clients anxiety, he said, “so if I can take that away I’m really doing what I want to do.”