Top 4 Legal Problems for Online Business

Are you in the field of online businesses? If so, read on because today I'm going to walk you through 4 of the top legal problem areas for online businesses that you need to be thinking about, whether you're just getting started or whether you're already running an online business, in terms of what you need to do to make sure you've handled everything legally.

You ready? Let's do this.

Hi, my name is Jim Hart. I am the founder of Hawthorn Law and the creator of the Lock it Down Legal Protection System, where we turn worried entrepreneurs into legally legit CEOs. Now, before we get started talking about how to legally protect and start your online business, let's talk about online businesses is and what an online business is not.

I bring this up, because this is probably one of the, if not the most commonly asked question I get from people who are thinking about or have purchased my online business legal toolkit. This is what people want to know. Do I actually have an online business? What does that mean? Is this advice going to pertain to me?

The first thing I'm going to tell you is that the advice I give in terms of how to protect online businesses, it's universal. It doesn't matter if you have an online business or an offline business, this advice is still going to apply to you and your situation. Now, I tailor it a little bit more towards online business, but it's going to apply to anyone.

What are Online Businesses?

Now, in terms of what an online business is, I define online businesses as any business where the primary way that you're selling goods or services from your business is via the internet. That could be your own website. That could be a YouTube channel or any other social media channel. This could be an Amazon business, Etsy, anything like that.

If that is the primary way that you're selling your goods or services, goods being products or services, then I would consider you to have an online business.

Which leads us to what is not an online business. So basically I consider something that is not an online business, is any other business that might be a brick-and-mortar store. That is basically selling their goods or services using non-online methods.

In other words, maybe they're doing all their selling through word of mouth advertising, or going to networking groups, or taking referral sources out to lunch, or maybe even using like the yellow pages. Do people really use the yellow pages at all? I mean, I don't know, or perhaps billboards. If you're a dinosaur lawyer, I guess that's something that you could do.

Now, when you're just getting started, you probably want to make sure that your online business, assuming that's what it is, is legally protected. There are a lot of different rules and laws and issues that can crop up the way for anyone who is starting a new business, and online business is no different.

For most of you that are doing this, it's hard to know whether or not you're doing everything the right way, because there are so many rules and issues that might pop up.

If you make a mistake, the stakes are high because you could expose yourself to personal liability, your business could get sued, you could run into trouble with either your taxes, or with the FTC, or some other government agency. Or you even run the risk that your intellectual property could be stolen, or somebody rip off your brand.

I mean, there's a lot of issues that people that are doing business online have to face that other businesses who do not have an online presence don't necessarily have to deal with.

So yeah, going back to what I said at the beginning about how all this information here is applicable to anyone who's has a business, whether you're online or off. I think that's true, but if you're an online business, you need to be even more dialed in and in tune to what I'm talking about. Hopefully that makes sense.

So to keep this all from happening to you, what I want to do with you today is share my four pillars of my Lock It Down Legal Protection System. So that you can make sure that your business is set up for success from the very beginning.

All right, let's start with the first pillar, and I'm just going to basically give an overview of each pillar and the main issues that you need to be considering. This is not an all inclusive list. There's going to be other things that are going to crop up, obviously. But you do need to make sure that these are some of the basic things that you're going to need to check off your list when you're deciding whether or not you've done things correctly.

Step #1 – Establish a Proper Legal Foundation

So the first pillar is your legal foundation. You need to make sure you have the proper legal foundation for your online businesses, or like I said, your offline business.

So some of the questions that you should be asking yourself are, do you need a business entity? A business entity would be like a corporation or an LLC or something else. Those are the two main ones. What type of entity should you form? If you do need a business entity. Then, how do you make sure that you form that entity correctly?

How do you make sure that you don't run into any problems where your corporate veil, that's what it's called, when you form that entity you're doing that to insulate your personal assets from your business debts. So how do you make sure that you protect that corporate veil and make sure that you don't have any issues down the road? So that's the first pillar, your legal foundation.

Step #2 – Protect Your Online Presence

Once you've got that set, then you need to start thinking about pillar number two and that is your online presence.

So whenever I'm talking to clients about their online presence, we're asking questions like, have you done a search to make sure nobody else is using your business or brand name? Is your name available on social media? If it is available on social media, have you made sure to go out and grab your name from all the different social media platforms? So if you have a brand that you want to use and have you checked it out on YouTube, you've checked it out on Facebook, have you checked it out on Pinterest, and Twitter, and Instagram, and TikToK?

Have you made sure that your name or something very similar to your name is available on all of those platforms? If it's a direct match, that's the best. Sometimes there's not a direct match available or, and that could be because maybe your name is too long and it won't fit into like Instagram's parameters or something. So do you have something similar that you can use?  Or conversely, is somebody else using the name that you want to use all over the place and that my friends is a problem. You don't want to get into yourself into that situation.

So once you have made sure you've grabbed up all those social media assets and you've grabbed your URL for your website. Then you want to go ahead and make sure that you've got the proper contracts in place on your website.

The things that you're going to need to be thinking about are, number one, most importantly, a privacy policy. You're going to need a terms of service, you're going to need legal disclaimers, depending on the type of business that you're in.

Then, you also are likely going to need a terms of sale. That's something that you're going to use if, and when you decide to start selling a product or a service on your website. It could be something as simple as coaching services or one-to-one freelancing work or something like that. But you need to have a contract in place that is going to be between you as your business and the clients or students that you're going to be working with, or coaching, or teaching, or whatever it is that you're going to be doing.

Also, last one, frequently overlooked, is a DMCA takedown notice. This is especially important if you have people that are making comments or posting content onto your website directly to help shield you from any copyright liability.

Step #3 – Your Contracts

Which brings us to the third pillar, and that is contracts for your business. Now, aside from all those other legal contracts that you're going to need for your website, you also need to have contracts in place for your business, and these are going to be one-to-one contracts typically.

We're talking about things such as if you're doing one-to-one client work. Do you have a contract to use with the people that you're going to be doing work for? Do you have an independent contractor agreement that you're going to use for people who you hire to do work for you? If you're selling products or services online, do you have a contract for that? We already kind of alluded to that as the terms of sale that you might want to put on your website when people are purchasing your products or services.

But sometimes you might need to have a separate contract to use with clients directly as well. Then, in terms of all those contracts, have you run through a checklist to make sure that those contracts contain all of the requisite legal clauses that you're going to need to make sure that they're legal and they're valid, and they're going to provide you the protection that you want them to provide.

Even better than that, you can go and purchase templates. We have templates available in my Online Business Legal Toolkit. I also have on my website, where you can purchase templates like these for your business.

Step #4 – Keep Your Intellectual Property Safe

The last pillar, or the fourth pillar is keeping your intellectual property safe. So when we're talking about this, we're talking about, is your business name or the name that you're doing business as with, in terms of a brand name, is it available?

Do you know, have you done a search? Have you done a search through the trademark office? Have you done a search through Google? I would go at least five to 10 pages deep with that search to make sure that nobody else is thinking about using, or is currently using your name.

Have you started the process of identifying what the main intellectual property is in your business? Do you even know what that means? When I say that. I realize, I'm a lawyer and I try to dumb down what I say for people on the channel who are non-lawyers. But do you understand what I mean?

When I say, do you have a list of your intellectual property? Do you know what intellectual property is? So we're typically talking about copyrights, we're talking about trademarks, we could be talking about trade secrets in your business. Do you know how to protect these things?

Have you run a cost benefit analysis to make sure that a certain asset, should it be protected? Should it not be protected? Do you know how you're going to do that? Do you have a plan in place to register those copyrights or file for trademark protection for those assets? You need to make sure you've done that.

Now, I recognize that there's a lot of material in this post. You're probably going to go back from whenever I started giving all the details about the Lock it Down Legal System, and make a list of all these things to do for your business.

But these are the things that you need to be thinking about when you're starting an online business. It's really important that you do this and honestly, this list is just the tip of the iceberg. There's so many more things that you might need to think about with regards to setting up your online business legally and properly.

So if you'd like to continue this journey and learn even more, here's another video I've done right here. That's going to talk at a greater length about the different things that you need to do to set up and run your business properly from the very beginning. Thank you so much folks!

If you are interested in learning more about how you can set up your online business for legal success, and have access to legal templates for your online business, click here for more information!

RELATED ARTICLES

Our Preferred Vendor (that's not us) to Form Your Business Entity...

Start LLC for $0 at IncFile

LATEST POSTS

LEGAL DISCLAIMERS

Hawthorn Law is a Document Filing Service and CANNOT provide you with any legal or financial advice. The information provided on this website is designed to provide information in regards to the legal aspects of online business. However, it is presented with the understanding that Hawthorn Law is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a licensed attorney, tax professional or financial advisor should be sought.