How to Legally Start an Online Business

How to Legally Start an Online Business

 

Are you looking to start your own e-commerce business? This could be an online business through Etsy, Amazon, Marketplace, etc. If so, you may be wondering how to legally start an online business. Lucky for you, I am an attorney for creatives just like you, and I put together this step-by-step checklist for e-commerce in 2023. Let’s get started! 

 

 

I am so excited for you to get your business legally compliant, so you can start working on your online empire! There are a few things you want to make sure are set up as you begin your new e-commerce business. Don’t worry, these are things you can easily check off the list. The hard part is knowing what you actually need to do, so now that you found this post the hard part is over and you can start moving forward! 

 

Disclaimer

What kind of attorney would I be if this didn’t have a disclaimer? I’m a licensed attorney and I practice in Utah and Idaho. I am not your attorney. This is not official legal advice. If you have any questions, please consult with a legal professional in your jurisdiction.

 

 

How to Legally Start an Online Business

 

 

E-Commerce Legal Step #1: Get your digital home base or website protected.

 

This step only applies to those of you who have your own website. If you are hosting your storefront through a marketplace website such as Amazon or Etsy, you are covered by their terms and conditions. 

 

If you are selling products on your own website, you want to make sure your footer is filled with docs that protect you. These include a privacy policy, website terms and conditions, a copyright statement, and any necessary disclaimers or disclosures based on what you sell and how you sell it.  If you have no idea where to begin with gathering this documentation for your website, allow me to help you out! You can get my website bundle HERE which will give you everything you need to protect your new business and website. 

 

E-Commerce Legal Step #2: Get the proper rights for the content you are creating.

 

You want to make sure you have legal rights to any type of media you use to help market your business online. This includes audio, video, photos, or written content. These digital goodies either need to come from you or they need to be credited from where it does come from. 

 

An easy way to check yourself on your content before you post is to ask yourself, “Did I create this?” and if the answer is no, you need to have something in writing giving you the rights to the content you are sharing. 

 

At a bare minimum, you want to use a form called a Copyright Assignment form. This is what someone fills out that gives you permission to use their content to help advertise your business. Don’t worry, I have you covered here too. Check out my Independent Contractor Agreement HERE that has the written consent set up for anyone you work with. Once they fill it out you will be good to go to share the content on your different social platforms. 

 

E-Commerce Legal Step #3: Set up proper boundaries with your vendors.

 

If you are using someone else to help manufacture your physical products, you want to make sure the manufacturing relationship is protected. This should be a good deal for both of you. Some things to look out for in this agreement are the error rate, feedback time, and non-compete language. If there’s nothing set up between you and your manufacturer, it’s time to set up some proper business boundaries that protect both parties!

 

Your fulfillment company is going to be another key player in your business. This is who helps with the logistics to actually get your products managed, picked, put into boxes, and shipped out. You want to have a clear understanding of how you are going to be charged for those services. Is there a flat fee, pick rate, etc? 

 

These are details you want to iron out especially if you have the type of business that can be described as a wholesale relationship, a pop-up shop, or any other kind of business where you will need to set up a system to sell physical products. 

 

 

 

 

E-Commerce Legal Step #4: Register your business as an LLC in your state. 

 

Registering your business as an LLC will set up protection for your assets which is something you’ll definitely want to have, especially as your business begins to grow into a larger one. The LLC is what will keep your business money and assets separate from your personal. This will help you keep things organized and if anything goes wrong with your business, your personal assets will always remain protected. You can check out my post HERE to learn more about the best way to set up your business as an LLC. 

 

E-Commerce Legal Step #5: Sign the business marriage prenup. 

 

When I say business marriage prenup I’m referring to your operating agreement! This document is a critical piece to your business, especially if you are working with a business partner. This document is even required by some banks and states. It includes things like the roles and responsibilities of each party in the business, what happens if someone leaves the business, etc. Check out my operating agreement HERE to learn more. 

 

E-Commerce Legal Step #6: Set up proper boundaries with your team members.

 

If you are just starting out, but need a little help to keep up the success of your business, you are likely to first hire independent contractors. But as you continue to grow, these contractors may turn into W2 employees. The important thing to do right now is to know the difference between these two types of employees. Otherwise, you could be at risk of misclassification.

 

I recommend working with a lawyer and an accountant when you’re ready to start hiring W2 employees just so you keep your business protected and legally legit as you continue to grow and have more people involved. 

 

E-Commerce Legal Step #7: Double-check that you have the proper rights to your business name. 

 

The last thing you want to find out is that you are squatting on someone else’s name and trademark. This is bad business for that competing company and for yourself. You don’t want people to mix up your business and you want your name to be memorable and the only one like it. 

 

To make sure your business name is the only one out there, do a thorough Google search and a trademark search. This will help you certify that your business name is clean, clear, and available to use for your business. 

 

And take this step BEFORE you invest in branding, logos, domain, etc! It would be so sad to find out that you spent all this money only to find out that you did it on a name that you don’t actually own. 

 

 

 

 

How to Legally Start an Online Business

 

I hope these 7 steps on how to legally start an online business gave you some direction on what you need to do next! I am so excited for you to start your e-commerce empire and I want to be there to help you make it legal every step of the way. Checking off these legal steps will ensure long-term success for your business and keep you away from all of those hiccups most don’t even see coming. If you liked this post, and want to stay up to date with keeping your business legally legit, follow me on Instagram @brittanyratelle! 

 

 

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LET’S CONNECT

Are you interested in getting a copyright or trademark? Book a brand-protected strategy session with Brittany HERE and get a game plan together for your brand and content.

 

Interested in working with Brittany for one-on-one legal services? Sign up for a 15-min phone consult at brittanyratelle.com/services.

 

Want an attorney-drafted, industry-tested legal template for your business? Take a free quiz and find out exactly what you need for your creative business at creativecontracts.co.

 

Or, browse through my quick tips and tricks by connecting on Instagram.