How To LEGALLY Start An Online Business In 2023 | A step-by-step checklist for ecommerce

Do you sell on a marketplace like Etsy, Amazon, eBay, or on your own website? You might have been overwhelmed and kind of confused with what to do to get yourself and your business legally protected. I'm online business attorney Brittany Ratelle, and I'm here in this video to give you a step-by-step checklist to help you as a physical product and e-commerce store get yourself legally compliant and ready to build your online empire. As always, while I'm an attorney, I'm not your attorney, and this is not official legal advice. So anything you hear in this video or any of my other resources and videos is purely for informational purposes only and does not establish an attorney-client relationship. If you have any questions, please consult with an attorney in your jurisdiction. Number 1, we're going to make sure that we get our digital home base or our website protected and make sure that we cover up any naked website footers that we have. Now, this advice will be very different if you only sell on a marketplace, and what I mean by a marketplace is something like Etsy or Amazon, meaning you are covered by their terms and conditions and you are just hosting a mini storefront on their website. If that's the case, then you can disregard number 1. If you have your own website, regardless what kind of website it is. You have to make sure that you have the compliant documents in your website footer, meaning you need a privacy policy, website terms and conditions, a copyright statement, and any necessary disclaimers or disclosures based on what you sell and how you sell it. Where can you get all those things? I've got the solution for you in my bestselling website legal bundle, my one-stop product for everything you need to get your footer covered and making sure that you're not running around the internet not prepared. This is also going to protect you in the case of bogus chargebacks or people asking for refunds. It's going to have your shipping policy, and it's also going to have information about what you collect from people who go onto your website. Number 2, you're going to have the proper rights to whatever content you are using. It means if you are selling something and you are using product photos or videos, or you're using other text, audio, video, or other media, you want to make sure that you have all the rights to those digital goodies to advertise and to market your own business. This means that when you are about to post a piece of content, you should ask, did I create this? And if I didn't, do I have something in writing transferring this piece of content so then that I can then use this in a commercial way for my business? If you have not taken care of that, make sure at the minimum you use something like a copyright assignment form. Ideally, you want to have any helpers in your business use an independent contractor agreement. So any 1099 people who might be social media managers, VAs, copywriters, anyone else who's helping you in your business, who's helping you create your You wanna make sure that you get all the rights to the goodies they're making for you. Hand them that independent contractor agreement. It also means that if you have any kind of photography or videography that has someone else in it, make sure you are using a model release or sometimes called a media release to have the rights to use that in your advertising. Number 3, make sure you're setting up proper boundaries with your vendors, especially if you are using someone else to manufacture goods, that that manufacturing relationship is protected and is a good deal for both of you. In those kinds of agreements, you're gonna wanna watch for things like what is the error rate or how many times a percentage of goods can they mess up? You still have to pay for everything. What is your period to receive goods and to make sure that if there's any problem with them that you could speak up? Make sure if there's any kind of clause that protects your intellectual property, is there any kind of non-compete language or non-circumvention, meaning that the manufacturer can't take your designs? Make sure you've put in whatever you can in that agreement. If you have nothing in writing, let's put in some proper business boundaries between you and your manufacturer. The other person that's gonna be a key player is your fulfillment company that's helping you with the logistics to actually get your stuff managed and picked and put into boxes and shipped out. Make sure you understand how you're gonna be charged for those services. Are you gonna have a flat fee or is there a flat fee plus a pick rate? This also goes to any kind of agreements that you might wanna have if you're setting up a wholesale relationship, a pop-up shop, or any other partners that you're gonna be doing a physical kind of event to sell. I have all of those agreements as well. If you could head over to Creative Contracts. Number 4, You're going to want to incorporate or register your LLC or your entity with your state and set up asset protection between your business money and your personal money. I've got lots of other great videos with more information about LLC, so make sure you set up your LLC. And as part of that process, you might in your state be prompted to get what's called a sales tax number, sales tax permit, or reseller's permit. Basically, this will be a number that will allow you to sell physical products and then to keep track of that sales tax. And file either every month or every quarter. Sometimes it depends on the state and how much you're selling and moving. Remember that if you're selling on a marketplace, this sales tax process might be taken care of. That's one of the advantages to selling on Etsy, for example. There's even some states that are starting to collect sales tax on digital products, and so make sure you know the law for your state. I recommend checking Avalara or TaxJar, are great online websites. Tip number 5: make sure you sign that business marriage prenup. By this I mean your operating agreement. An operating agreement is a really good idea as you set up LLC. It can be required by some banks or even by some states, but it is a critical piece of a business boundary. If you have a business partner, make sure you sign that operating agreement and you have a really good solid conversation about the decisions that need to be made about equity, investing, exit planning, intellectual property, and what are gonna be the roles and responsibilities of both partners in the company. Number 6, you're gonna wanna set up proper boundaries with your team members. This means that you're probably gonna start out with independent contractors in your operation, but you also might move into having W-2 employees. Make sure you you know the difference between the two. If you get that wrong, you could be at risk of misclassification, and there could be— yikes— some ugly penalties from both your state and the IRS that come with misclassification. Some of this is dependent on your state. There are some states that are a lot more aggressive in policing this than other states. I'm looking at you, California. So make sure you're working with a lawyer and an accountant if you started hiring W-2 employees, or you're getting close and you think that some of your contractors maybe should be employees. Number 7, make sure you have the rights to your name and that you're squatting on someone else's trademark. Do a thorough Google search and a trademark search to make sure that your name is clean and clear and available for you to be able to use in your business, especially before you invest into doing a lot of branding or buying and spending a bunch of money on a domain on something that you might not be owning. There might be some other things that come up in your business as you move forward with growth projects. If you're doing live events, you might need some legal contracts to protect you there. If you're doing giveaways, you need some fine print to go for those promotions, and I have a legal promotion kit for you. If you're gonna be doing work with influencers, Make sure you have a solid influencer brand contract. If you are doing a co-branded product, either between you and an influencer or you and another brand, you wanna make sure it's really clear who's investing into that project. How are you gonna be using each other's intellectual property and what are the asks in terms of investment of time and energy and money and marketing to make sure that this is a successful relationship? I'm attorney Brittany Ratelle. I'm so grateful that you've been able to watch this whole video. If you have other questions, make sure you check the description and you'll get directed to exactly where you can follow this checklist and the links to all of the agreements that I mentioned today. Don't get overwhelmed by this. Just take one at a time so that you can set up your business for success and get your digital empire legally legit.