You probably don't want to read this blog post because I included the word "legal" in the title. But here's the deal: you cannot afford to continue to overlook business law. All it takes is some basic groundwork to prevent hours, days, weeks, months, or years of heartache.
A brief interruption
Here's an example, I have a bunch of disclosures for you:
This article contains affiliate links, meaning that I receive compensation if you purchase through any of links on this page identified as such (at no additional cost to you!). I preach transparency around here, so know that affiliate programs in no way affect my opinions of these products. Truth: I 100% believe in what I recommend.
I am not issuing professional legal advice. I am not an attorney. This content is for informational purposes only. Please consult a legal professional if you need specific advice.
Similarly, I am not issuing professional financial, accounting, or tax advice. I may be an accountant, but I am not your accountant. This content is for information purposes only. Please consult an accounting, financial, or tax professional if you need specific advice.
The information in this post is based on my understanding of the United States' laws only. Please look into the laws in your country before taking any legal steps.
Now that that's out of the way . . .
Let me tell you a story
My first real job was working the summer camp at my church. I can't comprehend how I thought it was a good idea to do this. I have a strict rule against being outnumbered by children.
Regardless, I showed up on my first day, thinking I would, you know, get trained or something. I had zero legitimate childcare experience. Instead, they put me in a room - alone - with 13 preschoolers and left me for about 5 hours.
(There goes any chance of you guys sending your kids to a church's summer daycare.)
Turns out, while it was intensely stressful for me because I'm not good with hordes of children, I managed to keep them all alive for the summer and only had to file one accident report. (And I blame the kid.)
- Enter, the challenger
But there was one particular child who was almost trying to get me more accident reports. He was a terror, a complete ball of energy and mischief, and golly he was my favorite.
What a cute, intelligent, rebellious little kid. When he got into trouble, he had the cutest pout. When he was up to something, he had the funniest little smile. Such a dangerous combination . . . and he rocked it.
We had these recurring discussions - or rather, me yelling from across the playground and him ignoring me - about accidents. He loved running up the plastic slide. Those of us who are seasoned, grown human beings know that reckless behavior leads to higher chances of heavy consequences. This kid didn't get that.
"Don't run up the slide, you could fall!"
"I haven't fallen, yet!"
"That doesn't matter, you could still fall!"
"But I haven't fallen yet! I'm not gonna fall!"
"Just because it hasn't happened yet doesn't mean it won't. You might fall!"
"But I haven't yet."
I realize now that you can't logic with a preschooler. Again, I wasn't good at my job.
But here's the lesson I was getting at.
Just because it hasn't happened yet, doesn't mean it won't. If you haven't had a client try to rip you off, it could still happen. If someone hasn't stolen your original photos yet, it could still happen. Heck, if you haven't been sued before, it could still happen.
Legal negligence is dangerous. But the good news is that course correction is still possible.
So let's invest some time into brushing up on the basic business law concepts that are the most relevant to a blog/online business. Have you looked into any of these topics yet?
Your blog should contain several different legal statements. These are basically how you cover your bum and make it clear to your readers, customers, and/or clients how you're doing business.
There are some free statement generators out there that can certainly draw up some fancy words for you. However, if you take the time to read them, you'll find they really don't fit your business. They're just too general, and leaving large gaps in your statements can spell out some legal trouble if someone were to ever come after you. Ever hear of a loophole? That's why legal documents are so wordy and specific.
If you're running a large operation with your business - handling a lot of clients, with a lot of cash flow, and maybe even a team of employees - you're going to want to consult an attorney to draw up the most secure legal documents for your business. This is an investment, but it so important for the safety of your business.
The rest of us don't necessarily need that much just yet. Instead, we can gain a lot of value from some high-quality legal templates. You can get templates designed for bloggers at places like The Contract Shop, but I find the prices at the Jade & Oak Legal Marketplace to be more reasonable for our level.
(Bonus Tip: If you enroll in Jackie's Blog and Be Legal course, you can get a coupon code for 40% off any of the templates in her Legal Marketplace!)
So, what kind of statements do you need to create for your blog?
- Disclosure statements
Disclosures are designed to make clear the full nature of a relationship in which you have a vested interest. This means making it clear when you have sponsored content, are being compensated for taking an action, promoting an affiliate link, etc. These statements are required by law.
- Privacy statements
- Terms and conditions
A ToC statement establishes the "rules" for your website. It sets clear boundaries, defines acceptable behaviors, and can even outline consequences for breaking these rules (discontinued access to the site, usually). This statement is not required by law, but it is still so important for protecting yourself from future fires.
- Copyright statements
Copyright statements are also not required by law, but can be a great preventative measure against future conflicts. In the U.S., your original works are protected under copyright law the moment they are created. However, it's still important to have statements that can clearly define your rights to others. It also formally establishes you as the owner of that work as of the specific time of creation, which is a great way to have written back-up in case your rights are ever violated.
If you are conducting any form of business deal with another party, you should always have a written contract in place.
This is where small business owners get themselves into a ton of trouble. They sign on a friend as a client, or even a friend of a friend, hash out a verbal arrangement, shake hands, and call it a day. Then that friend doesn't pay you. They stop returning your calls. You want your money, but when you ask for legal advice, you realize that you have no proof the transaction even occurred. It's he said, she said, which is never ideal.
You never think it'll happen to you. But it happens to a lot of people.
The problems this causes could be as simple as someone under-delivering on a promise, but it could be as serious as a lawsuit. And a lawsuit, while relatively uncommon, can completely destroy a business.
- How to avoid that
It's so much easier to draft up a written statement that clearly defines what is expected of both parties, get everyone to sign it, and then file it away for safekeeping. It will save you stress and worry, which is worth mountains in the entrepreneurship game.
Contracts are another item that could be thrown together pretty simply, or taken to a lawyer. If you're a freelancer that deals with one-on-one clients, I recommend going the template or lawyer route again. Clients can be a handful, so you really want to set extremely clear boundaries ahead of time. Trust me on this one.
You can also find these templates at the Jade & Oak Legal Marketplace.
On that note, if you've signed on to work with a brand, or if you've signed on as a client for someone else - please, for the love of all good things, read the contract before you sign it. Read it. Understand it. Ask questions about it. Do not sign any document blindly, ever. I don't know if I can make this more clear.
If you are collecting email addresses and sending emails to your list, congratulations: you are a marketer sending commercial emails.
This puts you right up there with your favorite companies that send you all those lovely coupons and sales alerts.
This also means you have to follow the same rules that they do. Enter, spam laws.
- Spam law doesn't care about where you live!
Spam laws are in place to, you guessed it, eliminate spam. I'm sure we can all agree that Google's spam filters are more effective at doing this, just judging by the fact that you're still receiving spam emails. But the fact remains that the law is in place and we really ought to follow it.
And here's the kicker that people don't always realize: You have to follow the spam laws of the country that you're sending emails to.
If you're in Australia, but you have a reader in the U.S., you need to follow the U.S.'s CAN-SPAM requirements. If you're Canadian, but you're sending an email to Germany, you need to follow the Federal Data Protection Act (among others).
Luckily, most spam law tends to cover the same requirements, so it's not too difficult to stay legal in most countries. I wrote more about spam law (and linked to a helpful resource for global spam laws) in another post, so if you're realizing you haven't checked the legality of your emails, you may want to head on over there! Links open in new tabs 'round here.
Related Post: CAN-SPAM for Bloggers Explained
4. Business Entities
Boy, doesn't that sound like a fun phrase? Business entitites are one of the first things you learn in a traditional Foundations of Business college course. Then you learn it again in accounting classes. Then again in business law classes. And probably again in management classes. Probably even marketing.
The point is, once you learn these, you've locked in about 20% of a business degree.
While this isn't the most practical thing you can learn for operating your blog/business, it is actually some pretty valuable know-how.
You may already know more than you think. You've heard of partnerships and corporations. You've seen "LLC" or "LLP" at the end of business names. You maybe even heard of sole proprietorships.
- Hint for solo bloggers
If you're operating your blog as a business and haven't filed any formal paperwork with the state government, you're already a sole proprietor, and will probably remain so for a while.
Business entities could be an entire blog post, so I'm not going to dive too much into the different definitions. But I want you to grasp the importance of these terms.
Your chosen business entity impacts . . .
Taxes and filing requirements
Legal obligations and risks
Bookkeeping and accounting
Ability to raise money for your business
The biggest player here is probably taxes. So, if you're worried, I'll clear it up a touch in the next section.
Everyone's favorite T word! Mine might actually be "turkey sandwiches." I could eat any variety of turkey sandwich every day of my life. It's the perfect precursor to an afternoon nap.
We're talking about taxes now.
I can't give you personal advice on how to approach your taxes. If you own rental properties, your tax situation is immediately more complicated than the 23-year-old with a single W-2 job. If you have children, your tax bill/refund will look entirely different from an individual filing single with a standard deduction. And if you don't live in the U.S., I don't have a clue what your taxes look like, sorry.
However, there are a couple things I can clear up for you here, so let me try my best.
(You should know that the first time I tried to write this section, it was 1500 words. So you're welcome for this shortened version. When I inevitably turn those 1500 words into a separate post - once I figure out how to make it less bland - I'll link it here!)
- How your blog money gets taxed
Most bloggers are operating as "sole proprietors." This is business-speak for "one-man show." Women not excluded, that's just how the saying goes.
Anyway, if you haven't filed any fancy paperwork, and you are running your blog with the goal of making a profit, you're more than a hobbyist but not quite as formal as a corporation.
In the eyes of the law and taxes, you and your business are the same. If your business gets sued, your personal belongings/finances are at risk. If your business makes money, it's all yours.
And when it's tax time, your business is reported on your personal tax return. When your business starts to make a profit, that's taxable income (income that didn't have any federal withholding throughout the year!). If you aren't planning properly, this could result in a bigger tax bill than you were expecting.
You also need to factor in items like self-employment taxes. Your employer covers half of your obligation for paying Social Security and Medicare taxes, but if you're self-employed, you get to pay both halves (that sums up to 15.3% of your income!).
- How to deal
If you're feeling overwhelmed, that's how taxes work. They're overwhelming.
That's why I highly recommend consulting a tax professional. Personally, I'm biased towards Certified Public Accountants over places like H&R Block (who often wayyyyyyy overcharge).
The point is to educate yourself today so that you can be prepared. That's the thing about taxes. You only think about it once a year, but you should really be planning for it all twelve months.
It's a frightening truth, I know. But necessary.
Despite my very obvious struggle with my day job, I actually do love accounting. Accounting uses a genius system for tracking and recording money in a way that gives extremely accurate and insightful portrayals of a business' financial standing. Once you know how to understand it.
Even if you outsource your bookkeeping, it's super important to have a basic understanding of how accounting works so that you can actually know what's happening with your business.
I promise to write more resources around "accounting for non-accountants" in the future. For now, let's focus on some main points you should be educatin' yourself on.
- Proper accounting methods
Do you know the difference between cash-basis or accrual-basis accounting? It actually can make a pretty big difference on things like taxes.
Cash-basis is the simplest, and lucky for you, it's the one most often used by bloggers and other small businesses. Basically, it's when you count money as an income or expense when the cash actually changes hands. When the money is in your pocket, it's income. When it leaves your hand, it's an expense.
This is opposed to accrual-basis accounting, which is more about when the transaction occurred, or the money is earned. Let's say I get some people to click my affiliate links, and I earn about $100 in March. But that affiliate program payout doesn't happen until the following month, so I don't see that $100 in my bank until the end of April.
For accrual accounting, I'd count that $100 as income earned in March. For cash-basis, I would count it as income received in April.
Most of us like cash basis because we can see the tangible movement of money. Accrual basis is actually more accurate, but it introduces a lot of new complexities that are just not worth it for most small businesses.
- The accounting equation
The accounting equation gets complex, so I'm just going to introduce the terms. First off, here's the equation for the nerdy folks:
Assets = Liabilities + Equity
That equation might not make much sense, but as I said, let's just roll with the terms.
Assets are everything you own. Cash, equipment, property, etc.
Liabilities are everything you owe. Credit card debt, car loans, line-of-credit balances, etc.
Equity is essentially the value of the business. Equity gets complicated, but you can calculate it using the equation! Take everything you own, minus everything you owe, and bam: net worth. Equity.
- Financial statements
There are four main financial statements in accounting, but bloggers will really only be focused on two:
The Balance Sheet is the snapshot of your business at a single moment in time. It reflects the current assessment of your Assets, Liabilities, and Equity on a particular day (usually the end of the month, quarter, and/or year).
The Income Statement or Profit & Loss Statement reports your business' financial performance over a period of time (usually a single month, quarter, or year). This shows your income minus your expenses, to ultimately reflect your Net Income/Loss.
And, can you believe it, there are still so many other legal aspects of business that you could be overlooking. Do you know how to issue 1099s to freelancers you hire to help you out? Have you verified the giveaway laws in each state you're running it in? Do you know how to legally run a joint venture webinar?
This stuff is dense, foreign, and so overwhelming. I feel that way, and I took two business law classes once upon a time.
You try to Google it, but everything seems to be written more towards bigger businesses, brick-and-mortar businesses, or even legal professionals. How do we interpret the law for blogging?
If you're business savvy, I'm sure you could do it. But if you really need someone to just walk you through the terms, tell you what's important to know as a blogger, and prep you with legal readiness steps, you need help.
I've done my fair share of exploring the blog-scape for legal resources - I knew business law was important, but it was difficult and overwhelming trying to apply legal definitions to blogging.
I've found attorney/blogger Jackie Stoughton's brand, Jade & Oak, to be one of the most reliable, affordable legal solutions for bloggers.
Even better, she's offering her signature course, Blog and Be Legal, at a newly lowered price starting in 2018 - it's now only $157 instead of $297. It includes all the same videos that it did before, plus, it includes a Terms & Conditions template for freeeee.
And if you missed where I mentioned it earlier, you also get a coupon code for 40% off any of her other legal templates in her Legal Marketplace.
Win, win, win.
I know this sounds pluggy, and it totally is. I'm pluggin'. But I've dished out money for this course, I've worked my way through it, and I've listened to Jackie's simplified explanations of legal concepts that bored me to tears in college. I'd venture to say I learned more about business law from this course than I did with a year of actual business law classes.
Seriously, this is a great all-in-one resource for covering the most important legal aspects of a blogging business, short of hiring an attorney in person.
In the end, the choice of protecting your blog is yours. We are legally required to take certain measures, sure. But it's your choice to cover your bases and prepare for your legal/financial obligations as you see fit. It's your business, after all.
But one of the strongest messages of The Lazy Source is that a strong foundation up front makes for a sustainable, scalable, secure business in the future. That means safety, profit, and freedom.
Why wouldn't you want to invest in that?
I'm curious, have you set up any legal statements and/or contracts for your blog? How did you draft these out? Did you invest in templates, or did you use a free tool online? No judgments, let's just start a conversation!
You can comment below or email me at firstname.lastname@example.org.
Until next time!
- Katie Scott