One of the most overwhelming things for any new business owner is navigating the legal aspects of starting a business. Do I need to register my online business? Do I need to incorporate my online business? Do I need a business license? Do I need business permits? Do I need to hire a lawyer for my business? Where can I hire a lawyer for my business? How do I create legal documents for my business?
The questions are endless, and the answers can be hard to find.
What makes it even more confusing is that legal requirements and processes are likely to differ based on the type of business you run and where you run it. Legal rules, recommendations, and suggestions can vary depending on the industry your business exists in and where your business is located, so that’s why it’s always a good idea to seek out legal help and guidance specific to your particular location.
So, with all that said, this article will give you some suggestions for how to broach some of the legal aspects of starting an online business that might be confusing to you as a new business owner.
Let’s get into it!
Table of Contents
- How to Hire a Lawyer (Easily & Inexpensively)
- Registering a Business
- Do I Need a Business License?
- Creating Legal Documents for Your Online Business
- Do I Need a Trademark, Copyright, or Patent?
- Insurance & Liability
- The Legalities & Liabilities of Running Contests, Giveaways & Sweepstakes
- Get Started With Customer Data & GDPR
How to Hire a Lawyer (Easily & Inexpensively)
Where to Get Legal Advice for Your Online Business
Let’s start off with one of the most important questions: Where can I get legal advice for my online business?
The obvious answer: Ask a lawyer!
Ask a Lawyer
We know what you’re probably thinking: Seeing a lawyer sounds scary, right? Especially for a new (and maybe young) entrepreneur.
When you’re getting your business up and running, calling around to a few lawyer’s offices can be intimidating. Plus, when you ask them for an estimated quote, they’ll likely say something along the lines of “I can’t quote you until we sit down and talk.”
That’s probably lawyer-speak for “A lot of money,” right?
Let’s be honest, they might even charge you for at least an hour (or three) of their time to just answer a small, single question. Maybe they will even laugh at you because your question is so basic, right? Boy, no wonder so many new entrepreneurs give up.
Well, the good news is that things are changing. There are lots of services out there making legal advice much more friendly, inexpensive, and accessible.
If you’re looking for some answers to your legal business questions, check out the services and platforms below to find out how you can ask a lawyer the important questions you have in order to move forward.
The good news is that things are changing. There are lots of services out there making legal advice much more friendly, inexpensive, and accessible.
Take the First Step: Get Clarity
For years, when we were stumped by a legal question, we used Clarity. Created by Canadian entrepreneur Dan Martell, Clarity has got us past many legal roadblocks. We, along with many other entrepreneurs, likely owe much of our success to Dan and his service.
Clarity is as simple as it gets. It’s an on-demand marketplace that connects entrepreneurs with top advisors and industry experts, including startup lawyers and accountants.
Clarity essentially has over 30,000+ experts in all different disciplines from all over the world (mostly North America, though) that put up a profile and list their specialties.
Simply sign up to Clarity and search for the service you require (business law, patent, trademark, accounting, etc.) and view the profiles of people from your country, state, or province (the closer to you are the better, as laws tend to vary from state to state/province to province/country to country).
Each professional’s profile will have a fee per minute (usually several dollars per minute, depending on their knowledge and accomplishments). Once you find someone that appears to be a good match, you can send them a quick message, asking them if they would be able to properly answer your questions. When you’re satisfied they can help you, you can book a call with them.
You will automatically be charged at the end of the call for the number of minutes you spoke with the expert. Most of the calls we’ve had ended up being around 15 minutes and $30-$45. It was simple, inexpensive, reassuring, and the advisors have always been super friendly and helpful.
Check Out These Online Legal Service Platforms
Besides Clarity, there are plenty of other online platforms working hard to make legal advice more accessible to entrepreneurs. Below are some of the top ones and the countries they primarily serve.
Please note that we have not used all of these services; they’re just known to be some of the best in the business.
- Clarity (Worldwide): As mentioned above, Clarity is a great platform to seek legal advice from qualified professionals.
- LegalZoom (USA): Get DIY legal resources or reach out to attorneys to get advice. LegalZoom offers a wide range of business-related legal services, so they’re a great option for entrepreneurs.
- Ownr (Canada): Ownr is taking on the challenge of making business information and services better for Canadians. They don’t only offer legal business guidance, they offer all kinds of tools, resources, and support so Canadian entrepreneurs can start and succeed more easily.
- Avvo (USA): Avvo is a simple, affordable way to get legal advice. Post your question for free, and experienced lawyers will respond within hours. Or, find answers to previously asked questions at their Ask A Lawyer forum.
- UpCounsel (USA): Get high-quality legal services from top business attorneys at reasonable rates with UpCounsel. UpCounsel gets you price quotes right away from screened and vetted lawyers to get you high-quality legal services and legal advice.
- Rocket Lawyer (USA, UK, France, Spain, The Netherlands): Use Rocket Lawyer to ask a lawyer questions, create documents, or start your business—anywhere, anytime, on any device. They’ve developed simple-to-use technology to help you do more on your own and backed it up with their network of Rocket Lawyer On Call attorneys who are ready to help whenever you need it.
Registering a Business
Having done your research, you may already know the type of legal structure you want for your business. But if you aren’t sure, or you don’t know where to start, start with registering your business.
The Small Business Association has a user-friendly guide that goes into greater detail if you need more information.
What Does it Mean to Register My Business?
Registering your business simply means creating a legal entity for your business and filing its existence with your government. It’s essentially just a bunch of paperwork (and fees) but in most countries, it’s necessary to be a registered business in order to operate, and what type of business you register as can determine the amount of tax you pay, the paperwork you file, and your personal liability.
For example, US business owners can choose to registers as:
- A Sole Proprietor: An unincorporated business operated by an individual. In many regions (like the USA and Canada) you can be a sole proprietor without registering as a sole proprietor. The sole proprietor’s personal assets are not separated from the business’ assets, so they may not be protected if a claim comes against the business (such as a lawsuit)
- A Corporation (C Corp): A corporation is a group of people (or a company) that is recognized as one entity in the eyes of the law. Corporations can make a profit, be taxed, and be held legally liable
- An S Corp: “S Corp” stands for “Small Business Corporation” or “Subchapter S Corporation” and gives business owners special tax benefits
- A Limited Liability Company (LLC): LLCs are very similar to corporations, but they’re easier and cheaper to operate. LLCs are advantageous because they separate the business owner’s personal assets from claims against the business such as lawsuits, and there are also tax benefits
- A Partnership: Partnerships are businesses run between two or more individuals and the profits and losses are divided up as per the partnership agreement. Technically a partnership is not a legally recognized business classification in the eyes of the law, it’s simply an agreement that exists within the business itself
It’s worth noting that business classifications around the world can vary somewhat.
For example, if you’re in Canada, you can register as a corporation, partnership, sole proprietor, or cooperative. In the UK, you can register as a sole trader, an LLC, or a partnership. Keep this in mind and research what types of business registration options exist in your region.
Keep in mind that you can start as one registration option and change later! So if you want to start as a sole proprietor and register as an LLC or corporation later, you can do that.
Should I Register My Business?
Put simply, yes.
Because it makes your business legitimate, and it’s usually mandatory in most countries.
Registering your business means you’re recognized by your country’s government which although means you may be responsible to pay the necessary fees and/or taxes, it also means you may be eligible for assistance. As an example, some companies were entitled to financial support from their respective governments to stay afloat during the COVID-19 pandemic.
If you’re not “on the books” with your government as a registered business, not only may you be going against the law if it’s a mandatory practice in your country, but you automatically make your business ineligible for government assistance (and possibly even assistance from banks) if you’re ever in a tough position in future.
But! Depending on the type of business structure you choose, you may not actually have to register your brand.
As an example, if you’re a sole proprietor earning under a certain revenue threshold determined by your government, there’s usually no need to register as a business. Some US states also don’t require you to register your business if you’re running a small partnership.
However, these rules vary from state to state and region to region, so you’ll need to do some research to see what regulations apply to you.
If you’re a sole proprietor running a business under a name other than your own, you may be required to register your company as a “doing business as” (DBA) registration. We go into this in more depth below.
What are the Consequences if I Don’t Register My Business?
You may face fines, penalties, and potentially even lawsuits. You may also restrict your ability to later bid for contracts or other opportunities.
How Do I Register My Business? Do I Need a Lawyer?
You can either do the legwork yourself, employ a lawyer to do it all for you, or use one of the many online legal resources listed above.
It’s entirely your decision whether to use a lawyer or not, with the deciding factor often being price. Lawyers cost money, and prices vary wildly. In fact, the American Bar Association reports that while some lawyers charge a flat fee or set rates, others charge by the hour. Hourly rates can be anything from $100 up to much more. The average hourly rate according to Statista is $327 per hour, based on figures in 2020. Either way, it’s clear to see how quickly costs can creep up.
So, if you want to keep costs down and you’re prepared to spend some administrative time doing the DIY route, the next sections walk through some steps you need to take if you’re based in the US.
Choose Where You’ll Incorporate Your Business
Different states have different rules for each type of business structure so you’ll need to check your own state’s regulations and then apply for your state license.
Some people choose their incorporation location based on where they live—even more so if they plan on operating locally—but you may want to sell nationwide or even globally, in which case you need to take that into account too.
Legally Naming Your Business
You may already have a name for your business. Still, you’ll need to check that no other companies are operating in your state under the same name or are registered with the US Patent and Trademark Office.
While you can check business names online, not all companies are registered that way. You’ll also need to check your state’s county clerk’s office too. Remember, you can either choose a business name that covers your entire brand or select a “doing business as” (DBA) name. For example, Hennes & Mauritz AB are doing business as H&M.
If you’re genuinely stuck, we have a guide on how to choose a business name here.
In Canada, you also must ensure that no other businesses are operating under the same business name, and you may choose to register your business either federally or provincially. You may also register a trading name (similar to a “doing business as” name) if you wish to publicly operate under a different business name other than your legal business name. More information can be found on the Government of Canada website.
In the UK, however, different rules apply depending on the type of business you’re registering. Still, if you’re going to check if a business name already exists, your best port of call is the Companies House register.
Registering a business name in Australia can be done through the Australian Securities & Investments Commission. The entire process is laid out on their website.
Apply for Your Employer Identification Number (EIN)
Operating a business means paying tax. That’s why in the US, you need to apply for an Employer Identification Number (EIN). That’s your Federal Tax ID, and you need it when filing any paperwork and taxes with the US government. You can’t incorporate your business without this number.
In Canada, you get a tax ID from the CRA, and if you operate in Quebec from Revenu Quebec as well. More information can be found on the Government of Canada website.
In the UK, companies are issued a Company Registration Number (CRN) when they register as a corporation. More information can be found on the Companies House register.
In Australia, businesses can register for an Australian Business Number (ABN). More information can be found on the Australian Government website.
File Your Business Paperwork or Articles of Incorporation
Once you have your business name and EIN in the USA, you’re ready to file your paperwork or articles of incorporation (if you’re registering as a corporation). You need to do this in your state. This paperwork makes you a legitimate business entity. It contains all the information about your company, including any shareholders, partners, and founders.
Do I Need a Business License?
A business license is basically the official permission you need in your country, state, county, or city to operate the type of business you’ve registered as. Even if you’ve registered as a business, you may also need a business license in order to actually operate your business.
If you don’t, you may face the risk of being shut down or fined. So, you must find out if you need a business license in your region in order to operate.
A business license is how the government knows you exist, and more broadly, how it can keep track of how many and what type of businesses are operating and where. Business licenses also make it easier for the government to monitor tax revenue in each state or county.
As an example, liquor stores in many regions need a business license to actually operate and sell alcohol to the public. Some regions may only permit a certain amount of business licenses to be granted to liquor stores, they may only allow them in certain zones of the city or in certain buildings, and they may face certain rules and restrictions that simply registering a business doesn’t cover.
So even if you register your business, you may also need a business license.
The Different Types of Business Licenses
These are the most common types of licenses and a brief outline of what they are.
State Business Licenses
Your state may require you to obtain a license if your business falls into one of the following industries:
- Personal services such as beauty, hairdressing, doctors, nurses, cosmetics clinics, etc.
- Building contracting
- Debt collection
- Premises that sell alcohol (bars, cafes, restaurants)
- Real estate brokers
- Vehicle mechanics
This is because the state has a duty to protect its citizens’ health and safety. The US Small Business Administration (SBA) can help you determine the type of license your state requires you to have.
County Business License
Your county may expect you to have a county-specific license. You can find out if that’s the case by asking your county clerk’s office.
City Business License
Ask your city’s planning or zoning department if you need a license to operate locally. Again, this varies according to your location. Some cities like to regulate the number of retail or office spaces they have, or other types of businesses.
Federal Business License
While it’s unlikely that you’ll need one of these since they’re primarily for significant corporations, you may need one if you’re operating a business that:
- Makes, imports, or sells alcohol
- Transports or imports animals, animal products, or plants across state lines
- Operates aircrafts
- Imports, manufactures, or deals in ammunition or firearms
These are just a few examples—you can see the entire list on the SBA.
What Type of Paperwork Do I Need to Get a Business License?
Typically you’ll need evidence of the following:
- The type of company you operate
- Details of what your business does (such as a business plan)
- A state tax license
- Any other necessary permits such as an alcohol license or fire, health, and safety inspections
However, before applying, it’s worth checking with your state/county first, so you have everything to hand.
The above regulations apply to the US, whereas in Canada, apart from a few circumstances, businesses generally don’t need a federal or provincial license to operate. However, some companies do need certifications from professional bodies. The Government of Canada website has a go-to guide where you can check if the type of business you operate needs a license in the location you live/work.
What’s The Difference Between a Business License & a Business Permit?
While they may sound similar, there’s a bit of a difference:
- A business license implies that you’re competent and allowed to operate as a business in a particular field such as a liquor distributor or a medical care provider
- A business permit is usually in place to regulate safety. A permit might be granted after an inspection, such as a fire or health and safety inspection
There’s no hard and fast rule here and the difference between licenses and permits likely differs depending on the area.
Do You Need a Business License to Import Products as a Business?
If you’re buying products from overseas, the last thing you need is to be hit with fines because you’re not licensed correctly.
The good news is that (usually) you won’t need a license to import into the US. That said, in some specific cases, you might need a license, permit, or another type of certification. It really depends on the type of business you’re running.
So, before you leap in and start importing, take a look at the following resources to ensure that you have the necessary paperwork and are not at risk of breaking any laws:
- For guidance on the types of import items that need permits or licenses, head to the US Customs and Border Protection Agency. It’s super long, but you can always do a word search for the items you’re enquiring about
- The CBP also has a condensed version here
It’s clear that business licenses and permits can be a bit of a blurry area, and it can feel especially overwhelming if you’re just starting out.
If it’s too out of your depth or too time-consuming, you could always hire the services of a lawyer to take care of this for you. Just remember to be absolutely clear with them about the type of business you’re operating, so there are no miscommunications or errors further down the line.
Creating Legal Documents for Your Online Business
There are tools you can use online to get these documents made for you without having to hire a lawyer. These tools are ideal for new businesses because although they may not tailor the document specifically to your business, they’re a great starting off point.
How to Create Documents, Terms, Conditions & Policies
Here are two really great sources for obtaining templates for contracts, non-disclosure agreements, website policies, terms & conditions as well as other documents you may need for your business.
- Docracy: Docracy is the web’s only open collection of common legal documents, contracts, incorporation documents, and non-disclosure agreements. Docracy allows you to easily edit and sign the agreements through the platform and is a free service
Looking for specific types of policies?
Here’s a list of common policy generators:
- Terms and Conditions Generator
- Return and Refund Policy Generator
- Terms of Service Generator
- EULA Generator
And this is a list of common policy templates:
- Terms and Conditions Template
- Return and Refund Template
- Terms of Service Template
- EULA Template
Do I Need a Trademark, Copyright, or Patent?
When it comes to designing, developing, and inventing products, questions about copyright, trademarking, and patents often come up.
This is what we have to say: Registering a trademark, patent, or copyright takes time and money. It’s sometimes not the right choice for every business but it may be the right choice for certain businesses at certain times.
Your best bet is to consult with a lawyer who specializes in the protection you’re looking for to better understand exactly how much it will cost and when the right time to register it for your business is.
But first, let’s dive a little bit further into the details to give you a better understanding of the trademark, copyright, and patent landscape.
Trademarks, Copyrights & Patents
Not sure what the difference is between the three options?
- Copyrights: Protect intellectual property/artistic work
- Trademarks: Protect brands
- Patents: Protect inventions
To get a better understanding of the differences, visit the USPTO (United States Patent & Trademark Office) website.
In our non-expert opinion, copyrighting, trademarking, or patenting is not usually worthwhile because it’s usually only effective in the country where it’s filed, it’s costly, and when you’re just starting out you are just developing your brand so you usually don’t really have anything to protect.
Your best bet is to focus on your business’ branding and setting your product apart from copycats in any way possible—whether it’s by quality, price, options, availability, etc.—so consumers purchase from your brand to get the real thing and steer clear of knock offs.
Copyrights, trademarks, and patents are a tricky subject and in an ideal world, no creator, brand, or business would have their work stolen or used by others without their knowledge and consent, however, that’s not the reality—as harsh as that may seem. You’re better off building a strong brand so consumers want the real thing and then work with your legal team if an infringement occurs (if you have the time and money).
Again, we’re not qualified professionals in this area, so conduct your own due diligence and seek the advice of qualified lawyers in your area for up-to-date information.
The Invention City website also has some helpful information regarding patent protection, and they also cover licensing options if you want to sell your product inventions and earn royalty fees from the rights.
Do I Need to Use NDAs?
Many new entrepreneurs wonder whether non-disclosure agreements (NDAs) are worth their time—especially if you’re manufacturing new products and you want to protect your brand’s designs, intellectual property, trademarks, etc.
The short answer? It depends.
We know that’s annoying and unhelpful, but let us explain.
And again, we’re not qualified legal professionals and don’t know your business and its circumstances, so it’s best that you consult a qualified professional if you’re wondering about using NDAs (a quick call with a Clarity lawyer should hopefully be able to clear things up).
But, for the sake of pointing you in the right direction, generally speaking, we don’t think NDAs are worth the time and effort unless you really have something important to protect and you know NDAs could be a useful way to safeguard your business.
For many new businesses though, NDAs just aren’t worth the time and effort and they may not be as helpful as some people think they are. Depending on the NDA and/or where you’re located, your NDA may not be enforceable across international or even national regions, so it may not even protect what you want it to protect.
Plus, if you’re working with international manufacturers and you want them to sign NDAs so they don’t rip off your product designs and start making them themselves… It’s very possible that even if they agree to an NDA, they still may sell your design anyways or use the designs themselves, and you’d have to prove that they breached the NDA which can be super difficult and time-consuming to do.
So the long answer is that NDAs generally aren’t worth it, especially if you’re a new business. But (and that’s a big but) it’s going to entirely depend on your business and your business’ goals, so consult a legal professional for advice that’s best suited to your specific circumstances.
It’s probably much more worth your time to just accept that ideas get shared and ripped off and remade the world over, so focus on your brand and make it the one brand consumers want to purchase that product from. People can sell the same products as you, but they can’t be you. That’s your superpower. That’s your business’ strength.
People can sell the same products as you, but they can’t be you. That’s your superpower. That’s your business’ strength.
Insurance & Liability
Next up—let’s talk insurance!
Super sexy, we know.
But, if your business is your livelihood, any measures you can take to protect it may be worth your time. Plus, as a business entity, you may be liable for situations where things go wrong, and insurance can help protect you in those cases as well.
Essentially, getting insurance minimizes risk, which can minimize headaches and major losses in the event that anything goes wrong.
Let’s get into business insurance a little more.
Should You Insure Your Business
Whether or not you insure your business is a personal choice or a choice you and your business partners (if you have them) need to make. There is no one-size-fits-all option, and the type of insurance you may seek out will likely depend on the type of business you run.
Here are brief explanations of some types of business insurance you may want to consider getting depending on your region, industry, and circumstances. Note that these types of insurance may vary depending on your region and/or broker:
- Liability Insurance: Covers against injuries and damages
- Product Liability Insurance: Covers bodily injuries or property damages as a result of someone using your product
- Property Insurance: Covers the cost of damaged, destroyed, or stolen products stored in a property
- Shipping Insurance: Protects against lost, stolen, or damaged products or packages
- Cyber Liability Insurance: Covers damages related to data or security breaches
- Transit Insurance: Covers products while they’re being shipped from the manufacturer to the merchant
- Errors & Omissions Insurance: Protects against malpractice, error, and/or negligence
- Buy-Sell Agreement Insurance: Enables one business partner to use a life insurance death benefit to buy out another partner’s interests simply and quickly after the partner’s death
- Key Person Life Insurance: Provides money to the business if an important employee dies
You may not need to pursue all of these options, and the insurance brokers you work with may be able to bundle several options into one package, so consult a professional and see what’s available.
How to Insure Your Business
The best way to source insurance for your business is to consult with commercial insurance agencies in your region. Insurance practices vary widely, so it’s best to consult a professional in your area. Banks and legal professionals can be great resources, so reach out to them if you’re unsure of where to even start.
- USA: US Small Business Administration’s Guide to Business Insurance
- Canada: Government of Canada’s Guide to Business Insurance
- UK: British Insurance Brokers’ Association (BIBA) and Association of British Insurers (ABI)
- Australia: Australian Government’s Guide to Business Insurance
The Legalities & Liabilities of Running Contests, Giveaways & Sweepstakes
Did you know that there are actually certain rules and regulations you need to abide by if you run giveaways, contests, or sweepstakes through your business or on your business’ social media platforms?
Not knowing about rules and regulations could possibly lead to legal ramifications, so it’s important to be aware of them.
Rules regarding contests, giveaways, and sweepstakes vary depending on the state, country, and/or region so you may need to consult a legal professional to get sound advice. Here are some helpful resources:
- Contest & Giveaway Laws in Every State via Gleam
- Canadian Advertising Law Guide to Contests and Social Media
- Australia Online Competition Permits Guide via Gleam
- No Purchase Necessary Laws via Gleam
Get Started With Customer Data & GDPR
Often referred to, but not always understood, are the General Data Protection Regulations (GDPR) and their relationship and impact upon online businesses.
Let’s take a look.
What is GDPR?
The European Union’s privacy and data security law came into effect on 25 May 2018. There are literally hundreds of pages of requirements for businesses all around the world. While you may think it doesn’t apply to you as a US business, don’t be fooled.
This law is the most stringent privacy and legal security requirement globally. It imposes obligations on organizations wherever they’re located if they’re collecting data or targetting people in the EU. So, if your ecommerce store has an EU-based audience and/or your products/services are available to EU consumers, keep reading.
What Does GDPR Mean?
Put yourself in your customer’s shoes and imagine them using your ecommerce store’s website.
Each time you ask for your customer’s name, email address, postal code, or cell phone number, do they know that you’re collecting their data and what you’re doing with it? Have you told your customers you’re doing this and giving them the option of opting out? Lastly, have you advised customers of their legal rights in regards to you using their data?
If you’re reading this with a sinking feeling and realizing that you haven’t done any of these things, you need to optimize your store in accordance with GDPR compliance.
GDPR & Your Online Business
Generally speaking, under GDPR law, businesses have to:
- Keep customer data secure
- Disclose and report data breaches within 72 hours
- Appoint a dedicated data protection officer if their business handles enormous amounts of data
- Get consent from whoever they’re mining data from before collecting it
- Collect the minimum amount of consumer data for your business to operate
- Ensure their website clearly states their GDPR compliance
- Offer customers the “right to be forgotten,” so customers can ask businesses to erase their personal data
As far as what this looks like for your online business, you need to comply with the above points any time you’re asking visitors for personal information.
Imagine someone is on the checkout page of your online store: You ask for their address, name, and contact details so you can ship your product to them. At this point, you have to be transparent as to why you want this information so that customers can choose whether they wish to opt-in. For example, if you require their mobile number, you have to say why. It could be to only contact them in case of delivery issues, but suppose you intend to use that number for SMS campaign messages or special offers. In that case, your customers have to give you permission first.
Making Your Business GDPR Compliant
When it comes to GDPR, we suggest seeking some advice from your chosen legal expert or service. GDPR can be overwhelming and a bit of a minefield so it’s wise to put yourself in the hands of the experts to ensure your store is fully compliant.
Having said that, there are several steps you can take on your own to get the ball rolling with GDPR compliance:
- Familiarize yourself with GDPR’s vital principles, requirements, and terms. You can do that via the EU’s guide
- Check out what other online retailers do and compare it to your site. This is especially useful if your competitors operate in the EU
- Have a data breach mechanism on your website
- Have opt-in and cookie consent forms on your website, written in plain, jargon-free language
- Check if the online tools you’re using are GDPR compliant. For example, Google Analytics, Facebook, any email service you use, your chosen ecommerce platform, and Google Adwords
- Publish transparent terms and conditions
- Remove pre-ticked consent boxes so customers have to choose to opt-in, instead of choosing to opt-out
GDPR Non-Compliance or Breach Consequences
Finally, it’s worth noting that non-compliance and/or data breaches can result in considerable fines. The EU’s GDPR site tells us that there are two levels of fines:
- Less Serious: With fines up to €10 million, or 2% of your company’s global annual revenue from the prior fiscal year, whichever amount is higher. Even if you’re a small operation, the last thing you’re going to want is to pay a fine that cuts into your bottom line
- More Serious: This type of violation is reserved for companies that fail to be transparent about their data processing and aren’t clear about how customer data is used. Fines here can be as high as up to €20 million, or 4% of the company’s global yearly revenue from the previous financial year, whichever is higher
The size of the fine you’re issued is determined by the data protection regulator in the country where the violation occurred. That body uses 10 criteria to assess if you’re going to be fined and how much.
All these legal concerns when starting and growing your online business can be a huge hurdle for new and seasoned entrepreneurs alike. The good news is that you no longer have to make an appointment with a lawyer while they charge you their 3-hour minimum for a simple question! Today, it’s easy to find an accomplished lawyer online that can provide you with the answers you need sometimes for as little as $30 and a quick 15-minute call.
Check out the legal resources we mentioned in this article to get the help you need to get your business set up right.