5 Stages to Prioritize Legal Decisions in Your Online Business
Nov 08, 2023
As an online course creator, coach, membership or done-for-you service provider, you’re constantly confronted with choices about all aspects of your online business. You have decisions to make about what content to create, how to promote your content, what software and tools will best serve you and your business, to name just a few. One of the overarching categories of decision making in your online business relates to the operation of the business itself, and whether you have taken steps to legally protect your online business.
All online businesses go through cycles, some of which are related to growth, and others of which are related to things that cycle around and repeat. For example, when you are just starting your business, you are in the formation stage. This stage is not likely to repeat itself (unless you form a second business). Other stages, such as product launches, or working with clients and customers, are cycles that can repeat themselves over and over. In each cycle or stage of your business, you’ll need to consider the foundational aspects of your business, such as its structure and whether you are conducting your business so that it’s legally protected. Each stage of your business calls for different decisions about how to best legally protect you and your business.
Business Structure and Registration
This is stage 1 for nearly every online business owner. At this stage, online business owners need to decide if they are going to operate as a sole proprietorship, or take affirmative steps to form a legal entity, such as a limited liability company or a corporation. Every state provides business owners with the opportunity to form a separate legal entity to operate their business. This is an important concept to grasp, because it speaks to the very mindset of operating a business. When you act intentionally to form a business, set it up as a separate legal entity so that you can protect your personal assets and be recognized as a legitimate business owner, you’ve developed the right mindset to operate this business going forward.
How you think about your business at this initial stage is going to be critical for how you will think about and operate your business as it grows. If you are starting out thinking about your business as a business, then you will be best positioned to grow that business in the future. This is truly an important mindset shift that many online business owners need to make. Even if you decide to remain a sole proprietor, that is a decision about how you will operate your online business. Deciding to remain a sole proprietor, or instead to form a legal entity, should be a conscious choice, as should each decision you make at each stage of your business.
Learn more about business entity choices by reading, Maximizing Limited Liability Protection: Tips for Running an LLC as an Online Entrepreneur.
Protecting Your Website and Setting Up Marketing Communications
This is often stage 2 for online business owners. As you set up your website to host your content and collect customer leads, you’ll want to ensure that you’ve taken the steps legally required of you as an online business owner, as well as the steps that put you on track to legally protect your online business. Every website that collects any personal information, even just an email address, is required by law to have a privacy policy. Beyond a privacy policy, every online business should also have website terms of use and a website disclaimer. These documents set the rules of the road for visitors to your website, and provide protection for you in a few ways. These policies comply with legal requirements (to protect you from regulatory action), protect your content (so visitors understand its proprietary) and protect your scope of practice (so visitors understand what you do and don’t do).
Part of this stage is understanding the rules that apply to your communications with prospective customers. There are rules about email marketing and product claims. Having the right business mindset about these topics sets you up for success. Following these rules provides trust and transparency with your customers and protects you from claims by customers and regulators.
Learn more about protecting your website in my 3-part Blog series:
Adopting and Implementing Contracts
This is commonly stage 3 for many online businesses, but is also a stage that repeats at many different points in the lifecycle of an online business. Contracts permeate all aspects of your online business. If you put website protection in place, you use contracts to do that. When you are selling your course or program, you’ll want to have contracts in place here, too. Both website contracts and course or program contracts are usually called terms and conditions. Your customers, or prospective customers in the case of your website, become bound by these terms because they must accept them to join your program or use your website.
Later in your online business, you may find you need to add different types of agreements to meet your different needs. You may be hiring an independent contractor or employee to work in your business, and there are contracts to help protect your business when you are adding team members. You may be doing collaborations with other online businesses owners, and there are many different types of contracts to use depending on the type of collaboration you are looking to do. You may decide to offer an affiliate program, offer a VIP day or host an in person retreat. All of these actions call for intentional thinking on the part of the online business owner about how to take steps to legally protect themselves and their business in each of these situations.
To learn more about contracts in your business, read Three Essential Components to Make Your Online Business Contracts Enforceable.
Protecting Your Intellectual Property
The intellectual property (IP) in your online business, consists of copyright protected content and trademarks. Thinking about IP protections is stage 4 for many online business owners. Every online business gets some common law intellectual property protection at the time the content is created. For example, when you create original content and put it in tangible form, like a PDF or a video, you have copyright protection in that content. You can enhance that protection by registering the content with the U.S. Copyright Office. While it's probably not practical or necessarily affordable to register every piece of content, your most valuable resources in your business, such as your signature program, might benefit from registration. Trademarks, which are words and symbols that are associated with a business, can be common law trademarks, meaning the business owner associates them with your products or services, and may use the ™ symbol. The ™ symbol can be used by someone claiming common law trademark rights, but won’t protect the business owner from someone who registers the trademark, entitling them to use the ® symbol along with the mark.
Copyrights are generally easy to file, but trademarks can prove to be a bit trickier, and many trademark applications filed by business owners are rejected because they are not properly filled out or completed. If you’ve been using a trademark (and you have to use it before you can apply to register it) and it is making money for you, it may make sense to consult with a trademark attorney to help you with your application and to develop a trademark strategy. In the U.S., only the business owner or a licensed attorney can file a trademark, so be wary of services that are not licensed attorneys offering to help you with your trademark application.
To learn more about IP in your business, read Copyright 101 for Online Coaches and Course Creators: Protecting Your Digital Content from Copycats and Infringers.
Maintaining a Business Mindset
I’ll refer to this as stage 5 for online business owners, but it really permeates business ownership at every stage. This stage is about knowing that to run a business, there are certain steps to take to be a legitimate business. This includes intentionality about operating the business (sole proprietorship or LLC, for example), setting up proper systems for taking and making payments (bank accounts, payment processors in the name of the business), exploring the legal requirements around your communications (emails and marketing claims), establishing boundaries and expectations with customers and collaborators (using contracts), knowing the right way to hire team members (when you can have independent contractors and when you need to hire employees), and so many other things that happen in the course of operating a business.
Are you in need of contracts for your online business? Be sure to check out the Step Up Your Legal™ Store for your online business customizable templates.
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