9 Steps to Legally Protect Your Business, Part 2

This is part 2 of a 3-part series that covers the 9 steps to legally protect your online business. In this episode, we're covering business bank accounts, figuring out permitting and licenses for your business, and requirements for your website.

Download the free guide accompanying this series at artfulcontracts.com/legalchecklist

Key Takeaways

1. Open separate business bank accounts. This helps with budgeting and making sure your business is profitable, but it's also absolutely necessary if you have an LLC. Without a separate business bank account, a court could decide your LLC never existed.
2. Do your research on local permits and licenses you may need to run your business. Most online business owners won't need any, but it's important to double-check your local requirements to make sure.
3. Put your website policies in place! Without the right website policies on your website (or landing page, sales page, opt-in page, etc.) you could face fines or get your website shut down.

Resources Mentioned

• Download the 9-Step Legal Checklist
• Grab your website policies templates
• Watch the free masterclass
• Follow Amy on Instagram @artfulcontracts

Next Steps

Thank you so much for listening! If you enjoyed this episode, please reach out and let me know by sending me a DM on Instagram @artfulcontracts

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• Leave a review on Apple Podcasts
• Subscribe on Apple Podcasts, Google Podcasts, Spotify, or Stitcher
• Share the episode on social media and tag me @artfulcontracts 

Episode Transcript 

Hello and welcome back to this three-part series where we are going over the nine steps to start your business legally. This is the second episode of the series, so if you missed the first one, go back and check that out. So in this episode, we are talking about the fourth, fifth, and sixth steps to starting your business legally.

Hey, I'm Amy Nesheim, licensed attorney for online business owners and founder of my own business, Artful Contracts. You're listening to Legal Made Easy, the show that makes the legal aspects of online business easy to understand and implement so you can grow your business with confidence knowing you've got it all covered. Let's dive in.

Just as a quick recap, in the last episode we went over those first three steps, and that was choosing your business name, choosing informing your business entity, and getting an EIN number. So moving on from there, we are at step number four.

Step number four is to open a new business bank account. I'm a firm believer that if you're a business owner, you should have separate business accounts for your business. And this is important if you're a sole proprietorship, if it's just you, solopreneur, even if you don't have an LLC, but if you do have an LLC, it is absolutely crucial. The reason for that is that if you mix your business and personal money as an LLC, it's called commingling funds, and you can actually lose your liability protection entirely. A court can look at your business and decide that you are just using your business as your personal bank account, as your personal ATM, and that there is no wall in between you and your business. You blew it up. And that opens up all of your personal money to the risks of doing business.

If you form an LLC for your business, you have to open a separate business bank account. Now, if you already were operating your business as a sole proprietor before you formed your LLC, this is still true. You still have to open a new bank account. Even if so, even if you had a business checking account before forming your LLC, you probably have to open a new one because your LLC has to own the bank account. It has to be listed as the owner of the bank account. And most banks won't allow you to transfer ownership of your account to your LLC. Some might, you can ask, but in most cases, you'll have to shut down your previous bank account and open a new one owned by your LLC. To do that, the bank is going to want to see your certificate of formation or certificate of good standing and your EIN. So you have to get that EIN before you can open a bank account.

If you don't have an LLC, this is still super important because a lot of banks have a requirement that personal checking accounts cannot be used for business purposes. And this is probably, well, there's a few reasons for it. One of them being that they don't get to charge you the fees associated with a business account if you aren't saying that it's a personal account, right? But there are also due diligence requirements associated with business bank accounts that are not associated with personal bank accounts. It has to do with money laundering laws and stuff like that.

So banks really want personal checking accounts to be used for personal purposes. And if you're going to be doing business or putting business proceeds into an account, they really want it to be a business bank account. And you don't want your accounts to get shut down and the bank to say you can't use them anymore if they find out that you're using a personal account for business purposes. So that is a reason, even if you don't have an LLC, you should have a separate business checking account for your business.

Now, once you have those accounts set up, they are only useful to you if you use them. So make sure that your payment processing systems are linked to your business account. So Stripe, PayPal, whatever you use to process invoices, make sure they're depositing into your new business checking account. And on the other side, make sure you switch any recurring expenses to withdraw from your business account or get a new business credit card that you pay from your business account. If you formed an LLC, don't just keep using your personal credit cards for business expenses because that's another one of those things that can throw a grenade at that legal wall. So step four, form your business accounts and then make sure that you're actually using them.

Step number five may or may not apply to you, but you have to do the research to figure it out. And I know that is the most annoying thing, but I'm gonna do my best to help you with it. Step number five is applying for business licenses and permits. Most online service-based business owners and coaches are not going to need any business licenses or permits, but it entirely depends on the type of service that you provide and on where you are located. So your state, your county, and your city or town laws, and these vary widely across the country. So I really can't tell you blanket statement, you do or don't need permits or licenses. It depends on the type of service you offer and on where you're located.

Now I will say if you see clients in person or if you sell anything in person, you will likely need to get a permit or license of some kind. There are a lot of cities that require permits for you know doing business out of your house, but not if it's online, only if people are actually going to see you. It also depends on the type of services that you provide. But again, most of this, most of the licenses and permits center around in-person types of services.

So obviously, like liquor, you have to have a license for restaurant, retail, like uh construction, that kind of thing. All of those have licenses and permits associated with them. But again, it's all in-person stuff. So largely it's going to be in-person things that need licenses and permits, but I cannot say for sure that you don't need them. Again, check with your state. Your dot gov website will probably have information on it. You can also call your local town or county or city clerk's office, and they are usually staffed with very nice, knowledgeable people who will help you figure it out.

That brings us to step number six. Step number six is making sure you have all of your website policies in place on your website before you launch it or right now. Go do this right now. Now, when I say website, just to clarify, I don't just mean the full structure of your website, like where there's a home page, an about page, a services page, all of that. If you don't have that, you might think, oh, this doesn't apply to me. But this also applies to landing pages, opt-in pages, sales pages, anything that you operate that you put up there where people visit you and learn about you on the internet. You need to have these policies in place there.

And I say it like that because you don't need website policies for a platform that you don't own and operate, like Instagram, TikTok, Facebook. You don't put policies there, but you do need to put policies anywhere that you're building out the page, even if it's a website builder. So Squarespace, Wix, lead pages, ClickFunnels, Kajabi pages, all of that. You build it, you put the content up, you need to have your policies up there.

So what are those policies? There are three policies that the vast majority of people are going to need on their websites. And that is number one, a privacy policy, number two, terms and conditions, and number three, disclaimers. Not everyone is gonna need disclaimers, but 99% of people do. These are not things that you can skip over and do later. They're required. There are laws that require you to have a privacy policy in place on your website if you collect any information about your website visitors. So that could be cookies, it could be analytics, if you have any type of analytics on your site, which you probably do if you use any kind of builder at all. They all have analytics, right? You can tell how many people saw your site. If you use cookies, if you use Google Analytics, or if you're actively collecting information from your visitors, like their email address or payment information if they're paying you.

If you collect anything from website visitors, you have to have a privacy policy. And you can face huge fines, number one, if you don't do that, and if you're trying to run Facebook ads, that is the quickest way to get your Facebook ad account shut down if you don't have a privacy policy on your landing page.

Now, what a privacy policy does is it just is basically a statement that outlines what information you collect and what you do with it, and what control, if any, the customer has over or the visitor has over what you do with that information. And there are standard templates for these, they don't vary across types of service or industries or anything like that. They are dependent on the laws. Terms and conditions are a little bit different, they are not mandatory, but it is basically a contract between you and the website visitor that outlines the expectations between you, just like any other contract.

So it says what you promise to provide with your website, you know, you're not responsible for outages, and also how your website visitor should act on your site, what they're allowed to do with your content. So it's good to protect both you and your visitor. It's not mandatory, but it is super important. And again, you can get a template for this. There are standard, you know, standard phrasing, standard things that go in most terms and conditions that don't really vary very much across industries.

The third piece is disclaimers. Disclaimers, so for a website, a website disclaimer is a statement denying liability or responsibility for something that you never promised to give to the website visitor. These are really important anytime you are providing any type of advice that you don't want people to take as professional advice. So that could be something like if you're a health coach and you don't want them to take it as medical advice, if you're a financial coach or a budgeting coach and you don't want them to think that you're a financial advisor or an accountant or a CPA.

Or if you're like me, and so I would say, you know, I'm a lawyer, but I'm not your lawyer. Don't take this as legal advice. It's just for informational purposes only. That's what a disclaimer is, and you put those on your website to make sure that people don't misunderstand the type of information that you're providing. And also built into a lot, well, built into my disclaimers template is also disclaimers about how you use testimonials, earnings disclaimers.

So you don't promise any kind of this is great if you're a business coach, you don't promise any kind of earning potential based on your services or based on your free stuff. You you know, you're not promising to help them earn any specific amount. Affiliate disclosure, so you might have affiliate links on your website. All of that stuff goes into your website disclaimers.

All three of these, all you have to do is find a good template, and I have templates for this. I'll put a link to a bundle that I have in the show notes. And so you find the templates, you customize the templates, you copy and paste it onto a blank page on your site, and then you link each of them in the footer. And so just make sure that they're leak linked individually. You don't just have one link that says legal or something like that. You want to have them laid out separately. And that's all you have to do. And you just have to do that on every every single website page, including your landing pages, your opt-in pages, your sales pages, etc. Anything that you created and own, you have to put the links on there.

And that's true, even if you're using a website builder. Some website builders have templates that you can use. Sometimes they're good, sometimes they're not. But you cannot rely on the website builder to have created it for you or assume that it's not your responsibility because you're using a website builder, it's still your responsibility. All right, that was number six. Put your website policies on your website.

That brings us to the end of this second episode in this three-part series on the nine steps to legally protect your online business. Make sure you tune in to the next episode to hear the last three steps. And don't forget, we also have a written guide that goes along with this mini series. If you want to see all nine of these steps in writing, so you don't have to memorize them, you don't have to write them down. Just go to artfulcontracts.com slash legal checklist, and the link is going to be in the show notes for that as well. If you have enjoyed this episode, if you're enjoying this series, I would so appreciate if you would leave a review on Apple Podcasts and hit subscribe on your favorite podcasting app. Those reviews really help us out as a new podcast so that we can keep bringing you this content. All right, I'll see you next time.