Legal protection is a big concern for small online business owners. Even a single lawsuit can be devastating. However, you can take proactive steps to protect yourself and your business.
Legal Protection for Small Business Owners
There are a few steps you can take to make sure your online business is legally sound.
Own Your Business Name
Ensure that your online business is protected by obtaining ownership of its name. Check to confirm the name isn’t taken or registered by another business. This also means securing and owning your domain name.
Make Your Business a Legal Entity
Most small businesses start as a sole proprietorship. There’s nothing with this, but as your business grows, you might need to reconsider its structure. A limited liability corporation can help you separate your business assets from your personal assets in the case of a lawsuit.
Maintain Your Business’ Integrity
If you want to see success, maintain its integrity through your online actions and affiliations. Make sure there is no reason your customers would be ashamed to do business with you and don’t get caught up in conflicts or controversies; even if it's not true, gossip spreads like wildfire in the online world. Once your business has been portrayed in a negative light, it's tough to regain your reputation. It's easier to avoid any bad reviews in the first place.
Obtain Business Insurance
Purchasing business insurance is a reliable way to protect yourself. It can cover you against liabilities or issues not covered by your legal business structure. This is also key for protecting your content if you’re running an online business.
Use Contracts for Business Dealings
If you offer goods or services through your business, or enter into a partnership with another business, develop a paper trail. Setting up a company agreement for an LLC is especially important if you’re going into business with multiple people. Signed contracts will protect you and the other party by keeping a record of your agreement. Then, if any issues arise, you can refer back to your signed contract.
Put Legal Documents on Your Website
Online business owners rely on their websites. Therefore, you can include privacy policies, site disclaimers, and terms and conditions to your website to protect you. This is especially important if you collect contact information from your customers. They also protect your business from theft of valuable content or blog posts.
Make Sure Your Business is GDPR Compliant
GDPR is short for General Data Protection Regulation. It’s a set of regulations designed to protect consumer data. It is currently enforced in the EU and is soon to be implemented in the US. This rule applies to you immediately if you have customers worldwide, specifically if they provide you with their email addresses. If your online business is not compliant with GDPR rules, you could face fines.
Top Reasons Small Business Owners Get Sued
Contract Disputes
Conflicts arise between employees, clients, and business partners over delivery schedules, payments, and expectations. Protecting yourself with solid contracts will prevent these conflicts from causing legal issues. Californian companies are often looking to find employment lawyers in these cities to have a local expert to rely on. This level of assistance is easier to access once you have a contract in place.
Breach of Intellectual Property
In the online world, breaches of intellectual property are commonplace. In essence, this is the theft of content or photos that you don’t have permission to use. Registering your intellectual content can protect you if anyone tries to copy it. These breaches work both ways, however. You also have to be careful not to use images or content that isn’t your own from other sites.
Liability Risk
It’s impossible to protect your business from every possible lawsuit, but liability insurance can help. There are different kinds, including general business liability insurance, errors and omissions insurance, property insurance, or cyber liability insurance. Consulting with a small business lawyer can help you choose which type you need for your online business.
Theft of Confidential Information, Files, or Systems
Unfortunately, if confidential client or customer information, files, or systems are stolen from your business, you are liable for not keeping them secure. While it doesn’t seem fair that you could be liable for being a victim of theft, the law still makes you responsible for your lack of security. Therefore, make sure your security software is up to date and keep backups of all files.
FAQ
How Can I Protect My Online Business Legally?
In addition to those outlined above, there are five key things that you can do to protect your online business legally.
Separate Your Business and Personal Finances
Doing this will ensure that your personal assets cannot be taken if you get sued in the event of a loss.
Hire a Small Business Lawyer
Consulting a small business lawyer early on in your business will help you make sure you’re as protected as possible.
Be Careful What You Do and Say Online
The internet can be your best friend or worst enemy. Anyone can post bad reviews at any time, and it’s nearly impossible to remove the offending content. So be mindful of your business dealings and associates.
Enhance Your Data Protection
Getting hacked is becoming commonplace. So your online business needs to be protected against cybercrime. Keep your antivirus software up to date and choose a web server with enhanced security protocols.
Get Quality Insurance
Find business insurance tailored for your specific needs that will cover your assets in the event of a lawsuit.
How Do I Protect My Business Name?
Ensure Your Business Name is Not Already in Use
Do a Google search for your business name. If you find one the same, look at their location and the nature of their business. If these businesses are selling totally different products or services, you can keep your name. However, if they are selling the same things, it’s considered trademark infringement. There are also business name databases you can search that will provide you with more local results.
Secure Social Media Handles and Domain Names
After securing your business name, you need to do the same thing for your social media handles and domain name. Again, it’s essential to do all of this before filing a trademark application (if you choose to trademark your business name).
Trademark Your Name
Trademarking your business name, domain name, and social media handles will give you exclusive rights to those names for ten years.
Register Your Business Name With Your Local Authority
This doesn’t give you trademark rights, but it does give you the freedom to conduct business.
How Does Liability Insurance Protect Businesses From Legal Liabilities?
Business liability insurance protects your online business from incurring financial responsibility for any lawsuits that may be filed against you. It also covers any legal services you may require for your defense. The cost of insurance coverage depends on the type of business you have and where you are located.
Recommendations for Legal Services for Online Businesses
Conclusion
Legal protection for small business owners is essential to make sure your small online business is protected in the event of a lawsuit. As discussed in this article, there are steps you can take to do this. In addition, consulting a legal service can give you more specific details tailored to your individual business needs and ensure you have the protection you need.
