You’re ready to launch! You designed your domain, blog or website designed, and are ready to start your online empire. Before you do, here make sure you have considered these 10 basic steps for startups and establishing your online business, limit your liability, protect your assets, and keep your business legit.
Is someone else using my business name?
This really is your first step even before deciding what type of business structure you will use. If you don’t properly research the availability of the name you want to use for your business, product or service, you may find yourself the recipient of a cease and desist letter from someone owning the trademark on your wonderful new business name! If the name is available, you want to protect your rights and keep others from using your name.
Should I use an S corporation, LLC, C corporation, or something else?
One of the most critical steps is to decide what type of entity to use for your new business. You must consider your long-term goals for the business, plus the legal and tax benefits of each business structure. There are substantial differences in limitation of liability between operating as a sole proprietor, limited partnership, “C” Corporation, “S” Corporation, “B” Corporation, not-for-profit 501(c)(3) corporation, or LLC. If you are based outside the US, you have the same considerations but different structures.
To pick the right entity, you need to understand how each may limit liability and protect your personal assets, the ability to take on new investors, sell shares, or even issue an IPO. The tax consequences for each are substantially different. Also, what are your plans for retirement accounts, passing the business onto your heirs, exit strategy, etc?
You can set up your corporation, partnership, LLC, etc. in a matter of minutes online through your state’s corporate office (names vary by state), by completing the forms and paying the required fee. That alone will NOT protect you. The biggest risk of being sued personally and losing your personal assets is failure to comply with corporate formalities – what you have to do AFTER you set up the business. You should invest in retaining an attorney to advise you on the best entity for your business, ensure the ancillary forms and formalities are properly prepared and develop a system to ensure you file required documents annually.
Do I need a Privacy Policy.
This is not an option! If you do not have a privacy policy, you are exposing yourself to criminal and civil liability! A privacy policy assures your website visitors that you are operating a professional and legitimate business.
“Can I just copy the policy from FB, etc.…” NO! If you cut and paste the privacy policy from another website, whether it’s Google or Joe’s Online Rare Orchids Bookstore, you are violating their copyrights. Yes you can find free templates and cobble together your own, but are you sure it addresses everything that is required?
Do I need Terms of Use or Terms of Service?
Like the Privacy Policy, this is not an option! Terms of use, whether a browserwrap agreement or clickwrap agreement, is the contract between your business and your visitors, whether they become customers or not. Just like the Privacy Policy, not having a Terms of Use, or having an inadequate Terms of Service, can expose you and your business to criminal and civil liability. For some businesses, you need a ‘clickwrap’ option, to provide greater protection and proof that your customers agreed to your Terms of Use.
Should I file a Trademark or Copyrights for my name or product?
There are common law trademark rights and Federal registered trademark rights (denoted by ® ). They are different. Registration of a Federal Trademark is based on the first use in commerce principal. Without proper due diligence you could file a Trademark Registration with the USPTO and have it denied because someone was using the name before you, even if they did not register the name with the USPTO. This is why it is important to conduct name clearance due diligence, not just with USPTO, but state corporate registries and online searches for common law trademark usage.
Copyrights belong to the creator of the work – picture, drawing or writing. You cannot simply cut and paste text from other websites, or use images available on the internet, without prior permission. Similarly, it is always a good idea to provide a copyright notice on your website. Even the basic “Copyright 2017 All Rights Reserved” puts the world on notice that you are claiming the copyright in the information contained on your website.
My domain name was available, do I need anything else?
Just because you can register your name as a domain, does NOT mean you can use the name for your business or product! You need a full name search and clearance before you buy domain names or establish your business entity.
Who can I email?
The Federal Trade Commission (FTC) regulates business advertising in the US and publishes numerous guidelines on their website that also apply to online retail and e-commerce websites. (FTC advertising guidelines). You also should understand the requirements of CANSPAM and other regulations regarding unsolicited emails. Be sure your subscription emails and newsletters provide the required opt-in and opt-out language and links.
Do I need to encrypt my website?
If you maintain any information from your customers, clients, users, etc. be sure your website is encrypted to protect information and ensure you do not have any data breach.
Do I need an attorney to do this or can I do it myself?
Honestly, some things entrepreneurs safely can do themselves. Do you have the experience to do it correctly? What are the costs of a mistake? Sign up for my newsletter for more details on the DIY aspects of keeping your business legal and when to call the professionals.
Until then, Keep it Legit!
Bob