Do you have an eCommerce shop and sell physical products online? Get it legally legit with this checklist guide:
# 1 – 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 since you are collecting information (hello email list!) and selling physical products from it. The footer of your website needs:
© Copyright Statement
- Any necessary disclaimers or disclosures based on what information and offers are on your site.
Your website’s legal terms should also cover your shipping policy, your refund/chargeback policy, how you can use UGC, DCMA takedown language, and any disclaimers or disclosures based on what you sell and how you sell it.
# 2 – Make sure you have the proper rights to whatever content you are using
Which means either:
- You created it (with your own hands, voice, camera, computer, phone, etc)
- Or you got it from someone else and you have a proper license (in writing) to use it commercially
- You have permission to use UGC or user-generated content through your website terms
You can use a simple contract like the copyright assignment contract to handle this (this a bare-bones CYA, especially for things that you are selling where nothing was in writing!) or it could be covered in an independent contractor agreement if you hired someone to create content for you.
So, if you used a freelancer or independent contractor (sometimes calls a 1099-er) to help you in your business like a virtual assistant, graphic designer, illustrator, hand-letterer, web designer, social media manager, Pinterest manager, customer care specialist, integrator, online business manager, copywriter, etc), then hand that person an independent contract agreement from now and forever more to get all that lovely content properly transferred to your business “pot”.
# 3 – Set up proper boundaries with your vendors (manufacturing, fulfillment, shipping, retail, pop-up, or wholesale partners)
Use written agreements (either know what you are signing or provide your own) that protect your eCommerce operations, especially if you are selling through wholesale, or you are hosting or selling in pop-up shops.
# 4 – Incorporate, or register your LLC with your state and collect sales tax
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).
Make sure you set up to properly collect and remit sales tax in your state (or anywhere else you have “nexus”) and sign up for a reseller’s permit or sales tax number in your state.
# 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 – 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:
- Two “dueling” contracts (not recommended)
- You can insist the contractor sign YOURS, or
- You sign the contractor’s, but negotiate or redline any terms so that it matches what you have in YOUR trusty contract (that comes with a video guide, so you know what’s actually important in these agreements!)
# 7 – SECURE THE RIGHTS TO YOUR BRAND NAME (DO A TRADEMARK CLEARANCE SEARCH + APPLY FOR A TRADEMARK!)
Just because you have a domain, social media handle or even an LLC doesn’t mean that you own your brand name. Don’t make the mistake of waiting too long to get your brand name protected and locked down or you may be hit with a cease & desist or struggle with copycats and spin-off accounts.
Schedule a consult with brand protection attorney Brittany Ratelle (who has filed more than 250 trademarks) to find out if you’re ready to protect your brand and be ready for scaling and growth opportunities like joint products, licensing, books, merch, and multi-channel distribution.
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 physical product business:
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 use testimonials in your marketing, use a testimonial release to make sure you have permission to share.
If you use influencer collaborations, highly recommend a solid influencer brand agreement.
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.