Legally Start Your Online Business in 5 Steps
YAYY! You are starting an online business, congratulations! This is no easy accomplishment and we are here to say YOU’VE GOT THIS! There are endless things to consider when starting an online business, but like any start-up, there are legalities involved that are better to be addressed than ignored. To make it easy for you, we have outlined 5 steps that will help legally prepare your business for online success.
1. Naming your Business
Do yourself a favour and go on a “research deep dive” into the depths of the internet to see who else is using your name and how they are using it. You want your name to be distinguishable and identifiable to you and only you! Hot Tip: This will help with Trademarking later on as you build your brand equity now.
A business name can be as generic or specific as you like, and discovering how others might be using the same name, can help determine what you choose. For instance, if you are creating an upmarket e-commerce business, you wouldn’t want your business name to be searchable to someone else’s store or website, especially if they are selling similar products! This may unknowingly help out your competition by sending more traffic to their e-commerce business instead of to yours!
It is always a good idea to check availability (and purchase) a domain name for your desired business name, once you have landed on a winner. Even if you aren’t ready to launch a website just yet, by owning the website URL, you safeguard that name from any up-coming businesses that could also be in the works!
2. Business Structure
This little legal tidbit is important, so listen up. You want to start your business off on the right foot and choosing a business structure and registering your business with the Government is the first step in doing so.
Deciding on your business structure is something you need to research and understand, based on your business size, ownership, location and operation type. Depending on where you are located will determine the fees associated with business registration but it really isn’t as expensive as most people think.Determining the structure of your business will influence how you pay taxes and personal liability. Not only will it make you look legit with your clients, but it can offer additional protection in certain legal situations.
In Canada, we have multiple business structures, but two common structures to keep in mind are:
Sole Proprietorship: This is the simple-simon of small business structures. If you are looking for an unincorporated, sole owned business this could be for you. There is a requirement to get a Business Registration number if you operate under anything other than your legal name, but there is no legal requirement of a tax number (EIN), and your business and personal tax returns are done as one. Something to consider with this structure is that it’s subject to personal income tax and the owner is personally responsible for the liability of the business.
Incorporation: This is the next level of business structures, and is best to do with a licensed lawyer. Setting up your Corporation the right was is imperative to the success of your business. You can incorporate either federally or provincially. There are two main reasons to consider incorporation: Limited Liability and Tax Advantages. When you opt for incorporation, you are birthing a whole new person in the eyes of the law so it is more expensive than a sole proprietorship, you must have all the right paperwork in order, and file annual returns for your corporation with the government and for tax purposes. Understanding if this is right for you is always best discussed with a licensed lawyer.
There are several other optional structures to consider so be sure to do your research and fully understand what stage your business is in, expected growth, earnings and the legal requirements of each option.
3. Business Bank Accounts
Not a requirement, but a strong consideration to remain organized and on top of your business expenses. Remember legal services, much like purchasing Legal Template Contracts, are a write-off and a legitimate business expense. Use your business bank account to stay on track of it all! You don’t want to miss accounting for a specific expense that could be charged to the business.
Take the pressure off of tax time by keeping all of your business expenses and deposits in one place, TRUST US, you will be busy enough without that added pain in the peach.
[EXTRA BONUS] By establishing your business bank account, you are also improving your credit rating for your business, which may be important, if not now, in the future, when it comes to growth! A good credit rating can take time to establish so starting off earlier can assist in upping that credit limit if and when you need it.
4. Contracts
We LOVE all things relating to Agreements, Is that boring? Maybe! but that’s why you pay for legally drafted templates (like ours) to cover your business behind. Let’s think of it this way, do you like to feel protected and comfortable in your home at night? Umm, YES! Contracts are that protective layer for you and your business. With appropriately drafted Agreements, you can rest easy, knowing that both you and your client fully agree and understand what is required, with one document that outlines all expectations and terms.
You shouldn’t have to risk not getting paid and this is the answer to holding both Parties legally in check. Consulting with an attorney to have specific contracts drafted can be an expensive venture, one we find to be the most common reason for the age-old proverb, “I will get it done later”. NOW IS THE TIME! There are more important things to be done with your time so leave the contracts to us and get back to business. Contracts for Entrepreneurs is an affordable solution to hefty lawyer fees. Get protected and show up like the boss you are.
5. Website Protection
An online business should have a website, consider it your virtual storefront. Your very own online real estate that you need to legally protect! Not only are there legal non-negotiables for every website, but there are additional policies that can help protect you, not to mention show your clients that you are legit.
Don’t go down the world wide web rabbit hole looking for free templates, as it’s also illegal to copy certain documents from other sites. I know, there are a lot of sneaky laws that can land you in hot water.
Once again, we have got you covered. Contracts for Entrepreneurs has this Website Protection Bundle which has all the goodies you need to secure your website. We’ve got your back. Every document we provide explicitly outlines and explains everything with an in-depth, user guide made for regular people. That’s right, we want you to understand why and what you are agreeing to and posting on your website.
If you are ever looking for helpful online business tips, hacks and plain old good times, follow us on Instagram @contractsforentrepreneurs and let’s stay connected!
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