How to legally start a freelance business: checklist for online service based businesses

How to legally start a freelance business: Service Provider Business Legal Checklist

Nov 20, 2022

clients, Coaching, contracts, interior design, legal, LLC, partnerships

Do you own (or want to start) a freelancer business where you offer 1:1 services to clients?  Here is your guided checklist to get this specific type of modern business legally buttoned down:


# 1 – Protect the client service relationship = your main revenue stream

 Hands down, the most CRITICAL piece of legal protection for a service provider or service-based business is a solid client service agreement (sometimes called a Master Service Agreement or MSA in many industries). This is the agreement you, the service provider or freelancer, email or send to your client through your CRM software (like Dubsado, Honeybook or Harlow) to get the project or engagement officially “underway.” (no, the customer doesn’t have to print it out and sign it with ink, you can leave the fancy letter writing to your Bridgerton fantasies…)


A good, solid client service contract will cover:


  • Deliverables (a tight scope of work!)
  • Payment terms (how much, when, and how, including LATE fees and RUSH fees!)
  • Any third-party expenses the client needs to cover or reimburse
  • Confidentiality/NDA-type language
  • Intellectual property terms (who owns what, what can they do with it, and for how long?)
  • Cancellation or “kill” clause (how much is non-refundable? What happens to work that was already done?)
  • Revisions and approval details
  • How “change orders” or project scope changes will work
  • Timeline/ schedule
  • Client “homework” expectations
  • disclaimer and liability protection so that if things go wrong they don’t REALLY go wrong for your business
  • PLUS all of the boring legalese that turns this into a real bonafide contract you can feel proud putting YOUR name on (and which can protect you if the unexpected happens!)

You can find a general client service agreement here, along with tailored agreements for coaches, speakers, social media managers, interior designers, voice-over artists, balloon artists,  


# 2 – Get your “naked” website footer covered with website legal documents

Your website is your home base and it should be a solid, professional place, especially if you are collecting information (hello email-list and inquiries) and selling services from it. The footer of your website needs:


  • Privacy policy
  • Website terms (also called terms and conditions, Terms of use or terms of service, somewhat interchangeably)
  • © Copyright Statement

  • Any necessary disclaimers or disclosures based on what information and offers are on your site.

You can find all of the documents above, plus a step-by-step video guide on how to use them, in my best-selling all-in-one Website Legal Bundle. 


# 3 – Set up proper boundaries with team members

If you use freelancers or independent contractors (sometimes calls a 1099-er) to help you in your business (such as a virtual assistant or VA, graphic designer, web designer, social media manager, Pinterest manager, customer care specialist, integrator, online business manager, copywriter, etc), then hand that person an independent contractor agreement. An independent contractor should have a CONTRACT! If the contractor has a client service agreement they want you to sign – your options are:



# 4 – Incorporate, or register your LLC with your state

Without setting up a proper legal entity, you are operating as a sole proprietorship, which means your personal money and business money are all mixed together (and available for grabs if you get sued!) To put a nice big fence between your business money and your personal money (your car, home, savings account, retirement, assets with a spouse, etc) – please set up a limited liability company, or an LLC (the easiest and cheapest option!) or a corporation.


How? You can DIY, hire a third-party service (which I don’t recommend, because they tend to be a rip-off…cough, cough LegalDoom), or hire a local attorney.


To DIY your LLC and find your state business portal: Google “your state + LLC registration” and look for the .gov result (not the Legalzom/Incfile/zenbusiness links!). 


Tip: If you want to preserve privacy and you work from your home, make sure to set up a virtual mailbox AND a commercial registered agent and have those addresses ready when you submit your LLC paperwork online to your state portal. (I like Anytime Mailbox and iPostal1 for virtual mailboxes, but don’t get suckered into adding on any other services, you can file you DIY online by yourself in every state!)


After getting your LLC set up, use the same LLC name to get an FEIN or Tax ID from the IRS here. It is free and should take 5 minutes. (here’s a video tutorial on using the IRS EIN application site). Biggest takeaway= Don’t lose this number!! They’re a huge pain to look up (as in the IRS may NEVER answer their phone).


5 – Sign that business marriage prenup

If you have a business partner or partners and are thus “business married” , you need to get an Operating Agreement or “business prenup” signed between you! (also highly recommend these two episodes of my Creative Counsel Podcast all about creating and fixing business partnerships). An operating agreement is a binding document that outlines the ownership, decision-making, and exit planning for your business. It may also be known as a founder’s agreement, partnership agreement, or buy-sell agreement.


6 – Getting “people” legit – setting up clear boundaries with your CEO hat on

When you’re a business owner, you need to think differently about “boundaries” and how clear expectations can help EVERYBODY have a better relationship as your business grows and gets more complicated (and fun!) You may need to add other legal agreements if you offer these things in your business: 


If you have started offering VIP days (or want to!), these offerings have some special prep and boundaries that need to go into them to make them successful for both sides, so use a good VIP DAY client service agreement. 


If you host events,  you need an event waiver/release.


If you take photos or videos of people to use in your business, have them sign a model release (sometimes called a media release.)


If you run an affiliate program (where people are affiliates for YOUR offering), you should have them agree to these affiliate terms when they sign up for your affiliate program. 


If you run online giveaways, you need some fine print for the social media posts and on your website


If you have a podcast or video/YouTube show where you host guests, send a blogger guest release or podcast guest release as part of your booking workflow.


If you use testimonials in your marketing, use a testimonial release to make sure you have permission to share.


If you use influencer collaborations either as the creator/influencer, brand, or agency intermediary, highly recommend a solid influencer brand agreement.


If you sell digital products of any type, make sure you have terms of use for your online course, membership, digital download, or mastermind.


Want more guidance? If you’d like a step-by-step roadmap on getting a modern online business legally legit, download the FREE legally legit workbook!


Do you like to listen and learn? Tune into the Creative Counsel Podcast with attorney Brittany Ratelle to get business operations action items, inspiring founder stories (including the highs and the lows and what they would have done differently), and tips from leading online business leaders.


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