Operating an online business is a wonderful opportunity to generate revenue and create a real and lasting impact by sharing your message to the masses. In addition to the sales funnels, social media ads, and email lists, there’s also one very important piece to remember: LEGAL! Even though you may be running your biz from your laptop in your sweat pants, remember – you’re still creating a business (one that can be sued!) and you don’t want to overlook online business laws and expose yourself to liability.
So what do you actually need to know about online business laws? I’ve put together a list of the top 6 legal MUSTS you need as an online business owner to help you get started…
If your eyes just started to glaze over reading that… stick with me!! Online data collection and privacy is no joke these days (ask several larger companies getting hit with penalties!) and you don’t want to be caught on the wrong side of this!
So what exactly am I talking about here?
Don’t panic thinking you need to figure out how to draft this – this is something an attorney needs to do, and if you’re looking for a template you can fill in and plug into your website, I’ve got you covered here. Once you have the template filled out, it goes in the footer of your website, AND in the footer of all landing pages, or any other pop-ups where people enter their info.
Once that’s in place – you’re done! Pat yourself on the back for avoiding learning about online business laws and potentially avoiding thousands of dollars in fines.
- Include a disclaimer and Terms & Conditions on your website
The Disclaimer is where you’ll remind your website visitors that your content is meant as general information, not personalized advice, and that it may not be right for everyone who reads it. It reminds people to consult a doctor, lawyer, accountant, or other relevant professionals before implementing anything they read on your site.
This is actually more important than you might think. Our websites are visible to anyone with an internet connection…and there's a good chance some of them will not be your ideal client, and your content won’t be right for them. If that happens, and the person a negative result from something they read and implemented, we don’t want you to be liable! The disclaimer helps prevent this.
Similarly, your Terms & Conditions will lay the ground rules for your website – this is where you’ll outline the rest of the details surrounding your website, including where any disputes are going to be resolved (hint: in your country/state!) and remind readers that you own all the content on your site.
- Have a solid Client Agreement drafted for YOUR business (don’t steal from someone else)
One of the most common problems related online business laws that I see among online business owners is a Client Agreement that doesn’t include the right legal language and doesn’t apply to the type of work they do. Often, new business owners will use an agreement they find online or from a friend, without thinking about whether the agreement fits what they are doing in their business.
Most people think of the Client Agreement as a piece of paper that needs to be signed when you start working with someone new, and then everyone is good to go… but they aren’t sure what the agreement says, or what needs to be in it. In fact, what’s in this agreement is one of the most important pieces of your business, when you’re working with clients! If something goes wrong or there’s any confusion about the deal, this agreement may be the only thing you’ll be able to use to argue your case…and that is not when you want to realize the agreement doesn’t cover you or say the right things!
The other problem I see is hesitation to use a Client Agreement out of fear that a new client will see it as overly serious or scary. That idea is often coming from a business owner’s own hesitations about signing clients. In my experience, the truth is quite the opposite! Clients appreciate some level of formality, as it shows the coach is serious, a legit business, and someone who takes the client’s time and money seriously. Plus, it gives you and your client a clear place where all the details of the relationship are outlined, in case there’s a misunderstanding down the road. People want to give their money to someone who has it together and operates like a true business! Don’t be afraid to step into that confidence as a business owner and get yourself a solid client agreement. Hire an attorney to draft this agreement for you, or get a template drafted by an attorney in the online space and start protecting your business!
This is something that is so often missed in the online space! Many online business owners are moving toward the online course/group coaching model, which is amazing, and if this is you… go girl! BUT. There’s a super important step that needs to happen before you launch your course: know your online business laws and get the right legal document in place!
Even though your clients are purchasing a course or program directly from your website, it is still just as important to have these people agree to the terms connected to the program they’re purchasing. Maybe even *more* important, since you aren’t having any kind of discovery call or other conversation with them about whether the program is right for them.
But…since they’re purchasing directly from your site or sales page, it’s not feasible to email everyone a copy of a contract to sign, after they’ve signed up for the program. So…how do we do it?
Here’s how you set this up:
For those of you currently experiencing increased anxiety at the thought of all these legal documents, breathe! You can get access to everything I mentioned right here.
- Know how to hire
When you hire designers, assistants, and other individuals to complete projects for you, these people are known as Independent Contractors – they aren’t employees of your company, and it’s REALLY important to make that distinction clear, both in the agreement you have with them, and in their day to day tasks they complete. The last thing you want is for someone to be categorized as an employee, which opens you up to a host of requirements as the employer (workers’ compensation benefits, etc.)
How do you prevent this? First, you need a solid Independent Contractor Agreement in place, drafted by an attorney, signed by you and the contractor. If the contractor also has an agreement they want you to sign, choose ONE agreement to proceed with – do not simply exchange agreements. This is super important! Only have one agreement between you and the contractor. If you sign theirs, and they sign yours…you won’t have any idea which terms control, and since the agreements will likely say different things, you’ll end up with nothing in place. (Not what you want!)
Second, make sure the contractor has a level of independence when they are completing tasks for you, and that you aren’t micro-managing to the extent that they are acting like an employee. Keep them project-based and allow them to complete these projects or tasks independently.
Lastly, if they live in another country, you want to make sure you do a little research and have them sign additional forms to be sure you’ve got everything you need for tax purposes. I always recommend consulting with an accountant or CPA in your area if you fall in this category, to make sure you’ve got everything squared away.
- Keep all social media #ads and affiliate sales legal!
Last but not least when it comes to understanding online business laws… I want to quickly give you this little legal nugget: make sure you’re following the rules for all Ads, sponsored posts, and affiliate posts. The FTC has really started cracking down on sponsored posts and influencer endorsements (hence #sponsored and #ad), and requiring any post made in exchange for money, free products or services, or anything like that is clearly explained to the audience, to avoid false or misleading advertisements.
So, if you were paid for a post, or to talk about a product on Instagram, you’d use the hashtags #sponsored or #ad in the beginning of your post to disclose this. If you are an affiliate for another coach or brand, and you’re posting or emailing your audience to promote their product, you must also tell your audience that you’re an affiliate and will receive compensation if they sign up for the course through you. If you always remember to be transparent when you’re endorsing someone, you should be all set!
At the end of the day, while running an online business can be amazing, it’s also important to make sure you’ve got the right legal pieces in place, and you’re following rules around marketing and sales. You and your clients will be happier for it, and you won’t be waking up in the middle of the night wondering if you’re *really* protected. Taking the time to get these things in place can help you feel confident and empowered as a business owner because you’re becoming a savvy businesswoman who’s protecting the empire she’s building. And that is something to be proud of!
Disclaimer: While I am an attorney, this article about online business laws does not constitute legal advice, nor does it mean I am your attorney. If you have any specific legal questions or are in need of personalized legal advice, I always recommend finding an attorney in your state who can help you! If you are interested in getting set up with the templates I mentioned above, more info here: www.christywesterfeld.com/beginners-bundle/
Christy Westerfeld, Esq. is an attorney and legal resource for online entrepreneurs and coaches. She helps savvy business women cut through the confusion and overwhelm of legal and create an easy and affordable plan of action to legally protect their businesses. While legal may not be #1 on your list of exciting topics, understanding the basics is VITAL to your success as an entrepreneur, and Christy will help you learn what you need to know, in a way that is easy to understand! When she isn’t working, you’ll find Christy chasing after her toddler, binge-watching “Suits,” or signing up for the latest beach city half marathon.