BizLaw: Top 10 Legal Issues

Top 10 Legal Issues for Online Entrepreneurs

November 16, 2017 by Karen Taggart - No Comments

As an online business owner we all start at the same place…closing our eyes and clicking the “publish” button on our first DIY website and that first blog post. Remember that?

After a while your focus shifts to attracting visitors to your site, figuring out a social media strategy, and building your email list.

Eventually you’re ready. It’s time to offer your audience something to buy. Your very first product or service offering.

Now your little blog, your “cute little hobby”, is a business.

And throughout all of it, there’s been an “inkling” in the back of your mind that there’s probably some legal stuff you should check into, right?

As time goes on, this inkling starts to grow. It can build to the point of stressing you the heck out! Maybe even keeping you up at night.

The “what ifs” monster is knocking on your door. What if…

  • I get sued for the advice I give on my blog?
  • Someone steals my course name?
  • Someone copies my work?

 

So you write “find a lawyer” or “find out what legal stuff I need” on your never-ending “To Do” list, but you bump it down the list month after month.

SOUND FAMILIAR?

Most people I talk to describe something like this story. Some are even so paralyzed by fear when it comes to this topic that they stay stuck or worse yet…never even start at all.

I don’t want that to happen! I want you to follow your dreams and build a successful business that allows you and your family to live the life you’ve always wanted.

So it is my mission to help take some of the fear and overwhelm away! It doesn’t have to be so scary, it really doesn’t.

SEE, I KNOW SOMETHING ABOUT  YOU

You’re special. Whether you’ve made even $1 yet, you’re treating this “website thingy” as a business. You’re a professional. And you’re way ahead of the game.

I know these things are true, or that you’re ready for them to be, because you’re reading this article. Listening to a lawyer BY CHOICE.

You’re determined to learn how to legally protect yourself, your business, and your family and you make up a small percentage of business owners who are really taking your business, and yourself, seriously.

So pat yourself on the back and let’s get started!

WHAT YOU’LL LEARN

Below I’m going to introduce you to the Top 10 Legal Issues that apply to most online entrepreneurs. I’ll give a brief description of each, explain why it’s important, and offer a simple way to get it taken care of.

At the end I’ll tell you which is the most important to start with, especially if you have a limited budget (and who doesn’t in the beginning?).

WHY DOES THIS MATTER ANYWAY? 

Beyond the obvious things like protecting your assets and avoiding lawsuits, setting up CLEAR EXPECTATIONS from the beginning protects you and your clients and followers and helps build and maintain strong relationships.

Whether you have all your legal ducks in a row yet or not, always OPERATE FROM A PLACE OF INTEGRITY. Don’t hide the fact that you’re an affiliate for that course you’re promoting, don’t try to be sneaky about your refund policy, and don’t try to be “too cutesy” with your legal wording.

When it comes to the legal stuff, clarity and transparency wins. This isn’t one of those times where it’s better to ask for forgiveness rather than permission. It’s the exact opposite!

TOP 10 LEGAL ISSUES FOR ONLINE ENTREPRENEURS

  1. ENTITY SELECTION

What: Entity selection simply means choosing the legal structure of your business. Common types include corporations, limited liability companies (LLCs), and sole proprietorships.

Why: The structure you choose has tax implications, different fees and costs, and varying levels of ease in the management of the structure. Also, liability protection is the main reason for registering your business as one of the more protective structures, like a corporation or LLC. In many states, you’re automatically a sole proprietorship unless you register as one of the other types. This means you’ll have zero liability protection and your personal assets may be at risk.

How: Each state is different, but you should find a lot of info by searching “starting a business in {fill in your state}”. Often it’s your state’s Secretary of State website that will have a section for business owners. It’ll also lead you to the place where you file your paperwork and find out how much it’ll cost. Unless your business is more complicated, filing these forms are usually pretty simple.

*BONUS TIP: From day 1 (or as soon as possible) always make sure to keep your business and personal accounts, records, and assets separate. This is KEY to maintain the liability protection you want from your LLC or corporation!

  1. INTELLECTUAL PROPERTY

If you’re a business owner you DO own intellectual property. Intellectual Property, or “IP”, refers to copyright, trademark, and patent property owned by your business.

TRADEMARK

What: Trademark refers to the legal protection granted for the words, pictures, etc that identify your business and include such things as your business name, tagline, and logo.

Why: By statute, you automatically have trademark protection if you’re the first to use a name or logo, for example, as long as someone else hasn’t registered it first. While you do have some protection, you need to federally register your trademark to be given the strongest protection under the law. However…not all business owners need to register their trademark. It depends on your industry, your plans, and your ability as well as interest in enforcing it if someone violates your trademark.  

How: If you decide you’re going to register your trademark with the USPTO (US Patent & Trademark Office) it’s a good idea to contact an Intellectual Property attorney either online or in your local area. It’s a complicated process that takes approximately a year and a half to complete. If the forms aren’t filled out the right way, it may take even longer. I’m a DIY gal, but this isn’t a good area to DIY.

COPYRIGHT

What: Copyright refers to the legal protection granted for writings, photos, music, artwork, etc.

Why: Similar to trademarks, by statute you automatically have copyright protection when you write an original story or take a photo. While you do have some protection, you need to federally register your copyright to be given the strongest protection under the law. Again, most business owners do not need to officially register everything they create.   

How: If you decide you’re going to register your copyright or would like some help to figure out if you should or not, it’s a good idea to contact an Intellectual Property attorney either online or in your local area.

  1. WEBSITE LEGAL NOTICES

What: Most states and countries require by law that a Privacy Policy be posted on every website. It describes how you protect the personal information you collect from your site visitors as well as data collected through third party sites for website analysis (such as Google). It is also required to run ads on Facebook and other online media.

A companion document to the Privacy Policy is your Terms & Conditions. They set up clear expectations for your site visitors to know what’s expected and allowed and what’s not. The T&C include disclaimer language and copyright notices as well.

A Disclaimer is an attempt to limit your liability for the services or advice you provide to a client, customer, or site visitor. There are a variety of types covering medical and health fields, affiliation with others, professional advice, earnings disclaimers, and some basic ones always included in contracts.

Why: Like I stated above, the Privacy Policy is required by law (with some pretty hefty fines!), so if you’re doing business online you fall under the laws of other states and even countries. It’s a pretty simple process to post them on your site and can be quite painful if you don’t and get caught.

Your Terms & Conditions protects both you and your site visitors. It is different and separate from any Terms you use for your paid courses, programs, or products and should be posted on every individual website.

While nothing is 100% guaranteed, Disclaimers give notice to your clients, customers, and site visitors that you can’t be held liable for the choices they make in their lives and businesses. Please note, though, that if a court finds that you were negligent in any way the disclaimer won’t likely protect you. It’s not a “free for all” coverage of anything and everything you may do. It’s meant to protect your normal course of business, done with integrity and competence.

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

  1. CLIENT AGREEMENT and TERMS OF SALE

What: These agreements cover the terms and policies for the sale of your product or service. You should link to it from your sales page as well as during your checkout process. It’s also a good idea to require that the purchaser click a checkbox stating that they have read and agree to your Terms.

You can also have your client or group participants sign a Client Agreement or Terms of Sale using a digital signature service or by simply emailing it to them and asking them to sign and send it back.

The Client Agreement is for 1-on-1 client work, while the Terms of Sale contract is perfect for group programs, courses, or even digital products. Please note, other lawyers may title these documents in different ways. The title isn’t important though, what matters is what’s IN the agreement.

Why: While the website legal notices cover the visitors to your site, the Terms for your products and services are for clients and customers who buy something from you. It includes such things as your Refund Policy and Cancellation terms, two very important topics to clearly cover.

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

  1. PAYMENT PLANS

What: If you accept partial payments, monthly installments, or anything other than payment in full, you should clearly state your Payment Policy. It should include due dates, late fees, what happens if a credit card payment fails, etc.

Why: Like everything in the legal area, setting up clear expectations is key to avoiding conflicts and problems down the road. It gives you the power to choose to stick with your stated policy, but also to make decisions on a per-client basis.

How: Your Terms of Sale or Client Agreement should include your payment policy. But it’s also a good idea to state it more clearly on your sales page and during the checkout process. Since this is a prime area for potential conflict, state it as clearly and obviously as possible. For your Terms of Sale or Client Agreement, Click to visit The Template Shoppe

  1. REFUND OR RETURN POLICY

What: Your refund or return policy lays out exactly when or if refunds or returns are allowed, how they go about claiming one, and how the process works when someone does want a refund. It doesn’t matter if you offer a 100% guarantee or have a zero refunds policy, it should be clearly stated.

Why: Again, clear expectations are so important! Especially when it comes to money. Your refund policy or guarantee should be very clearly stated on your sales page and during the checkout process. It’s sometimes even required by law, so always be sure to post it where your potential clients or customers will see it. It can even be a great sales tool! Oftentimes, seeing that your offering is 100% guaranteed can push them off the fence and sign up for your program.

How: You can find examples online to model yours after, use online template sites, or have an attorney draft one for you.   Click here to download my FREE Refund Policy options

  1. TESTIMONIALS

What: When a client or customer offers feedback on your product or service it can be an invaluable piece of your marketing efforts, but you must have their permission to use their words and photo. If you paraphrase their statements into a concise testimonial, it’s even more important to have them approve it.

Why: The FTC (Federal Trade Commission) has strict rules when it comes to sharing testimonials. They must represent the typical results a new client or customer can expect and not a highly unusual story. If you do use the “miracle” result story you have to be super clear and state that “results are not typical” and what the more common results typically are. You also can’t use someone’s “likeness” (photo, words, etc) without their permission. Note: Some professions have very strict rules on using testimonials. If you’re not allowed to use them, even anonymously, don’t do it! You could jeopardize your license or other professional credentials.

How: Click here to get my FREE Testimonial Authorization & Release Template.  To keep things super simple, you can just add a shortened version of it to the end of your client feedback email you send out after working with each person. (You have a feedback system set up, right?) 🙂

  1. AFFILIATE PARTNERSHIPS

This included both being an affiliate for others and running your own affiliate partner program.

SHARING AFFILIATE LINKS

What: If you’re an affiliate for others, meaning you receive payment or commission for sharing links to their products or services, write promotional stories or posts about them, or promote them in any way, the FTC requires that you must clearly say so not only in your terms, but near the links themselves.

Why: The FTC (Federal Trade Commission) has a lot of rules when it comes to doing business and many of them revolve around clear and conspicuous notice to consumers to avoid confusion or misunderstanding. There are stiff fines for violating these rules too!

How: Make sure your site terms include an Affiliate Disclosure, but also make sure to clearly state as close to the link as possible that you’re an affiliate and that it is an affiliate link. You can find examples to model yours by online, on online template sites, or have an attorney draft one for you.  Click to download my FREE Affiliate Disclosure

YOUR AFFILIATE PARTNERS

What: If you have your own affiliate program, meaning other people help promote and sell your product or service for you and receive a commission for doing so, you should use an Affiliate Agreement.

Why: The FTC (Federal Trade Commission) has very strict rules on affiliate programs that most online business owners are not paying attention to. Using an Affiliate Agreement adds a layer of protection between you and your affiliates. If you don’t have one and one of your affiliates breaks the FTC’s rules on promotions, for example, YOU can be held liable. Not good.

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

  1. CONTENT CONTRIBUTION

This topic includes inviting guest writers to your blog as well as contributing content to someone else’s course or program or others contributing content to your course or program.

GUEST BLOGGING

What: Other than the big blogging sites, many people don’t think of the need for a Guest Author Agreement, but it is a good idea to have one. It clearly states the rules for accepting guest posts, whether they’re paid or not paid, how and when the content can be shared, whether the author can post the same article on their own site, etc.

Why: The goal of most legal agreements is to avoid misunderstandings and potential conflict. Jotting down the expectations of each party is always a good idea, even for something as simple as guest posting.

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

CONTENT CONTRIBUTION

What: Like many other issues already covered here, it’s important that everyone is on the same page. When you contribute a recorded class to someone else’s course, for example, you should cover all the details so everything is crystal clear. The same goes for others contributing content to your course or program as well.

Why: Clear expectations for the win! Are you sensing a pattern here? Even if the parties forget what was agreed to, you’ll have a document to refer to that will hopefully help clear the air. It can even play the role of the “bad guy”, meaning you can blame the contract if that helps.

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

  1. INDEPENDENT CONTRACTORS

What: When you hire someone to work for you either for a particular project or ongoing and they’re NOT an employee, they are an Independent Contractor. (See the IRS website or your state’s employment division for more info on how to tell the difference). For example, virtual assistants, designers, web developers, bookkeepers, online business managers, etc are often Independent Contractors.

Why: It’s so important to know what’s expected, when it’s expected, how to deliver the completed work, what will be paid and when, how either party can cancel the arrangement, etc. Clear expectations! Also, if you consider someone to be an Independent Contractor and the IRS determines that they’re actually an employee (or vice versa), this can have big tax consequences.  

How: You can find template options online or hire an attorney to write your custom documents for you. Click to visit The Template Shoppe

WHAT SHOULD I DO FIRST, KAREN?

I’m so happy you asked. The moment you collect even $1 from a client or customer, make sure you’re using a written agreement of some sort. Even if you aren’t able to use an actual contract at this time, make sure all of the most important issues are discussed and agreed to by both parties.

Even back and forth emails clearly stating that it is the intent of both parties to agree to these terms has been held up in court to be a legal contract.

TAKE ACTION!

When you’re ready to start using a contract (it’s not that complicated and expensive, I promise!), you should start with a Client Agreement for one-to-one work and/or the Terms of Sale document for groups, courses, or digital products.

This is your starting point! The agreement between you and whoever is paying you.

The #1 THING TO REMEMBER IS TO RELAX! Take it one step at a time.

Take action on #1 and put reminders for the other things in your calendar so they won’t get forgotten or bumped down your list over and over.

Taking the time now to build strong legal foundation for your business can save you a lot of time, money, and hassle later.

I know, I know…YUCK! You don’t want to deal with this stuff.

It’s confusing

It’s boring

It’s scary

But think of it as preventative medicine. It’s much worse to end up in court about to lose all of your assets and to know you could’ve done something about it long ago.

Of course, there are never any guarantees when it comes to the law. You can never completely avoid the possibility of someone suing you. BUT you can take the steps now to make sure that if that does happen, you will come out of it as painlessly as possible.

And more importantly, using contracts helps to build and maintain your business relationships. If you have the details neatly laid out for everyone to refer to, many conflicts can be resolved quickly and easily. And even if you decide to “part ways”, your relationship can be maintained for potential opportunities in the future.

“Avoid lawsuits beyond all things; they pervert your conscience,

impair your health, and dissipate your property”
~Jean de la Bruyere

Please note, this is not an exhaustive list of any and every legal issue that may affect your business now or in the future. You should consult with a local lawyer who can become an important member of your team as you build and grow your business. And remember…while I do like you a whole lot, I am not your lawyer. The content provided here is for educational and informational purposes only. We are not forming an attorney-client relationship. Good luck!