Everything your need to know about protecting your business when hiring your first employee

Now that you are ready to bring on your first hire, it is important to think about what you should have in place to protect your business. 

What do we mean by protecting your business?

It is similar to how you keep your home safe. For instance, would you invite any stranger off the street and give them full reign inside your house? When you start hiring and growing your team, it is so important to make sure that you are adequately protected because you don’t want to put yourself in a situation where all of your hard work goes down the drain. You need to keep your business safe, just like you keep your home safe.

We will go over everything from business structure, insurance, employee agreements, and much more when it comes to protecting yourself and your business. 

You have worked hard to build your brand! Read on to learn what you need in place to help you grow and prosper.

Things to consider when protecting your business

We are going to go over a lot of information in the blog, but the first thing we suggest that EVERYONE do is, find an attorney to help you. They can help you through your process, and make sure everything is in line with state laws. All information provided in this article is for educational purposes, please consult the appropriate legal and financial professionals for more specific guidance. Our business coaches can help get you started on the process and point you in the right direction. 

1. Setting your business structure for protecting your business

Start by making sure that your business structure is set up wisely. Your business needs to be a completely separate entity from you. This is important because having a separate business entity can protect you from being personally responsible for legal problems that arise in your business. 

This is especially important as you hire more employees. If you hire a dietitian, and a client files a complaint or lawsuit against that dietitian, you do not want to be personally responsible in that situation.  

Make sure to formally set up an LLC or corporation to give you the most protection.  You may be tempted to do this on your own, but it is recommended that you hire an attorney to make sure that all these documents are completed and maintained properly.

Make sure your business has:

  • A business tax ID: Many small business owners use their social security number for various parts of their business. Once you plan to hire employees, you are required to have a business tax ID so you can file taxes appropriately, and open a business bank account. Once you have your business tax ID AKA a federal tax ID, make sure to change over everything with your social security number on it to your tax ID.
  • Separate bank accounts: you do not want to commingle personal and business accounts, primarily for tax purposes. As a business owner, you are allowed to deduct business-related expenses like supplies and education. But, you must have the proper supporting documentation to claim these deductions.
  • Separate credit card accounts: This will help you track your business expenses so you can get the appropriate deductions and compare the cost of running your business to how much revenue you have generated.  This will also allow you to issue a business credit card for your employees as needed who may need to purchase supplies, subscriptions, etc for the business.  You can determine the credit limit for each employee to monitor spending.

2. Insurance for Protecting Your Business

Business insurance is just like any other personal insurance you would get to protect yourself if an unfortunate situation was to arise. It is best to contact an insurance broker to walk you through the specifics of your unique situation, but here are some key points to keep in mind:

Insurance for the building:

Just like renters insurance, it is wise to have insurance on the building/buildings where you see clients. You will need insurance to cover the building and the contents of the building.  (Think computers, printers, furniture, equipment, etc.) If there is damage to the building, you want to make sure your assets are covered, so it’s important not to skimp on your coverage here. 

You may even consider having insurance to cover supplies and equipment at your remote/satellite locations where your employees or independent contractors are working from home. 

Make sure to keep your insurance up to date. need to update the insurance policies on your offices and the contents of the building,  as you grow. This is easy to forget when you are busy running your business.

You may think this is unnecessary, but I can share with you a personal story about why this insurance is so important. A few years ago,  another office in our building had a pipe burst, which led to a flood in one of our office locations. This causes a lot of damage, and we had to shut down for a week! Luckily our insurance not only paid for the clean-up, but they also paid for lost wages of our staff, which decreased the burden on the business.

Insurance for the people:

Another insurance to consider is business insurance AKA as slip and fall insurance. This is helpful in case something happens to someone in your office, whether it be a client or one of your team members.

This is completely different from malpractice insurance (more on that below). Business insurance protects you if someone is injured on your business property.

For example,  if someone falls down the stairs in your office and is injured, you want to make sure you have the necessary protection.   We have had two different incidents with our employees in our offices that required medical attention, and slip and fall insurance helped cover the necessary expenses in those situations.

Insurance for the Activities of the Practice:

As a solo practice owner, I am sure you have malpractice insurance to cover you when you see your clients. Now that you have a team, you will need to consider how you want to approach coverage of professional liability insurance.

If you update your policy and provide coverage for yourself and your employees, you will know that they have adequate protection in case a situation arises. However, this does increase your cost as a business owner.

Some practice owners require their employees to get their own insurance, which saves you money but does require you to make sure they have adequate coverage.  Be sure that you are also covered for other business activities such as social media, speaking, writing, etc. Not all professional liability policies cover all the things your business may be doing.

3. Agreements/Contracts with Employees and Independent Contractors

Before you hire your first employee, having contracts in place for onboarding is crucial for protecting your business.

Employee/Independent Contractor Offer Letters:  

It is wise to keep a strong paper trail of all communication with your team from your initial offer letter and throughout their time of employment.  When you hire your first employee, provide an offer letter that states the responsibilities of the position, length of the position, and compensation.

Once this document is signed by you and your employee, it is considered a legal document, so it can be used to resolve any disputes that might come up relating to employment terms. 

Non-Competition Agreements:

Consider this: you hire an employee, bring them into your practice, train them and teach them about your practice. Then one day, they leave and open up their own business down the street, and take your clients with them?

This is why having a non-compete in place is crucial. These protect your business from someone on your team who may want to set up their own practice and take the business’ clients with them.  There are templates on the internet for non-competes, but I suggest you consult an attorney to make sure you are adequately covered before your employee signs it.

Non-Disclosure Agreements (NDA):

These agreements typically create a confidential relationship between the parties to protect trade secrets such as business plans, social media practices, handouts, client information, etc. So your employee cannot share unauthorized information with other parties that can steal your business secrets.

 Photo and Video Releases:

This one is most often overlooked, but important if you have team members helping you with social media and content creation.  Make sure that your team members agree in advance that all photos and videos taken and used within your business are the property of your business. 

It would be very costly and time-consuming if a team member left took the materials with them and you had to recreate all of the content that was gone.

4. Protecting Your Business’ Intellectual Property

Intellectual Property (IP) are creations of the mind, like your brand, things you have created, and strategies that help you run your business. You do not want someone to profit off of your hard work, so having your IP protected is crucial to your business’s success.

Trademarks (company names, logos, brands):

A trademark protects the things that make your business yours! Once you have established your business, it is essential that an attorney help you trademark your business.

You want to make sure that a trademark attorney does a search and clearance of your company name, files an application, and advises you on when and how to use the trademarks for common law ™ and once registered mark ®. 

Trademarks are federally registered so you do not have to use an attorney in your state.  If you want a recommendation, feel free to reach out to me.  I have an attorney who would be happy to give you a free 15-minute consultation.

Copyrights (blog posts, Instagram graphics, programs, books): 

Copyrights protect your original works. Copyrights are generated automatically once your work is created and done in its final form, but you may still want to consider registering your copyright with the US copyright office.

Why? Registering your copyright helps make your work a matter of public record, and will help you if you have to bring a lawsuit for infringement against someone. You can find more information here

If you have something you want to register for, this is something you can do by yourself. The process is done online, and when it is complete, you get a certificate in the mail. 

 If you have employees creating programs and content for you, make sure that it is clear in your agreements, who owns the products created during the time working with your business, and what happens when someone leaves your practice. We recommend discussing this with your attorney and putting the terms in the non-compete agreement.

Trade Secrets:

Trade secrets are techniques and strategies that you use to help your business run smoothly. When you bring on a new employee, think about who you want to “give the keys” to?

While delegating is important, think about who really needs to know the nitty-gritty details of your practice? Refer to the discussion on non-disclosure agreements and consult with an attorney so that your practice is protected. 

5. Protecting Yourself

Now it’s time to talk about protecting the business’s most important asset, you! The business would not exist without you, so making sure you are covered will give you peace of mind if the unimaginable were to happen.

Disability insurance:

What do you have in terms of disability insurance in case you are not able to work for an extended period of time? This may not seem like a way to protect your business, but as a business owner, it really is.  It is important to think of yourself as a key person that makes the business run. If you are not able to work, you will need to hire someone to take care of your responsibilities.  Having a disability insurance policy helps make this possible. 

Life insurance:

It is recommended that you have a life insurance plan as well as documentation of a succession plan in place so that the business will carry on.

business owner for protecting your business

6. Passwords for protecting your business

How many of us use the same 2 passwords for all of our accounts? Well if someone was to have access to one account, would they be able to access other information that is sensitive?

Ask yourself, who needs to know the important passwords, are they strong, where are they kept and how often should they be changed? Getting hacked can become a headache for sure, so it is important to have strong systems in place to keep your business protected.

7. Protecting Patient/Client information 

Patient information is of course protected by HIPAA. Even if you are well versed in patient privacy, you need to make sure that your entire team is savvy about HIPAA.

When you hire someone, document their training and understanding of the policies. Our new team members review a HIPAA powerpoint and then take a quiz to demonstrate their knowledge.

Why is this important? If your employee commits a HIPAA violation, this helps protect your business because you have documentation that you provided training on HIPAA procedures and policies. So your employee cannot come back after the violation has occurred and state that you never trained them on the appropriate protocol.

Also, consider the policies and procedures when an employee leaves your practice, so you can maintain patient privacy. Think about things like restricting access to emails and patient charts or changing passwords so no one has unauthorized access after they are terminated.

The list of how to protect your business can seem overwhelming, and that is why we recommend that you find an attorney that is a good fit for you to help you through the process.  

Some attorneys need to be local (within your state) due to licensure and employee laws that are specific by state. 

If you want guidance on the best way to protect your nutrition business from experts that have successfully implemented things to protect their practice, schedule a 15-minute consult with one of our business coaches.

Rebecca Bitzer loves to empower Registered Dietitian Nutritionists (RDNs) and their clients.  Co-author of Welcome to the Rebelution: Seven steps to the nutrition counseling practice of your dreams and  Taste the Sweet Rebellion: Rebel against dieting.