Starting a business is so exciting – the branding! The color scheme! The collaborations with other like-minded women – that a lot of the time we forget about protecting what we have worked so hard to create. Here are the top 5 legal mistakes I see women make when starting their online businesses.
1) Not Forming a Business Entity
Forming a business entity that limits liability acts as a wall around your personal assets (your home, bank account, car, etc.) in the event someone were ever to sue your company and get a judgment. While both LLCs and Corporations limit your personal liability, the two entities differ in terms of how taxes are paid, how money is raised, and what paperwork needs to be filed. It’s a good idea to consult an attorney and/or accountant to see which is right for your business needs.
2) Not Having Contracts
Sometimes business owners feel awkward making clients sign such formal agreements. But CONTRACTS actually help to avoid uncomfortable situations by establishing expectations and setting clear boundaries between parties. Contracts set forth the scope of work, define deliverables, and state how parties get paid and what happens when one party fails to pay. They limit a party's liability and determine where and how disputes can be handled. You must have a client contract to protect your income, an independent contractor agreement with your contractors, and a non-disclosure agreement with anyone who comes into contact with confidential business information.
3) Not Having Website Policies
Did you know that if you don’t have a PRIVACY POLICY on your website you could be fined by the government or sued by private third parties, or have your Google/Facebook/Instagram ads shut down? Your Privacy Policy tells users how you collect and store user data. Both California and the EU have privacy laws that require specific legal language in your Privacy Policy. Your Website Terms of Use is also one of those very important legal documents located in the footer of your website. It’s your contract with anyone who visits your website or purchases your products, it tells visitors how they can behave, what kind of comments they can post, states any user account policies, explains your refund and payment policies, protects your intellectual property, and finally, spells out how and where any disputes are handled.
4) Not Having Disclaimers
DISCLAIMERS are necessary if you giving any kind of advice on your website that involves an industry requiring any kind of license (medical, legal, financial industries). A disclaimer states that the reader should not rely on your advice, which protects you from liability. If you are receiving money for a product or were given a product for free in exchange for an endorsement, you also need to have an affiliate disclaimer per the Federal Trade Commission.
5) Not Protecting Your Intellectual Property
You’ve spent time and money creating your digital product (photos, e-books, videos, courses, blog posts) but you have very little leverage against anyone who steals these things from you unless you register for copyright protection. You’re going to want to trademark your brand name and course name to prevent copycats too.