You have a great product or service and you want to create a business online to market and sell your offering. You likely will have (at least at the beginning) production, operation, and/or delivery issues that will require your focus and attention. However, during your initial start-up, there are a few important legal concerns about which you should also be thinking. Although there are many legal matters (employment issues, consumer protection, advertising and data privacy issues) that may require more of your attention as your business grows and becomes more established, here is a list of six basic concerns that you should consider when starting your business.
1) Naming Your Business: If you are going to conduct business on the Web and want customers to find your site, you are going to need a company name and a domain name for your business that is distinctive, does not already infringe the trademark rights of another business, but that is readily accessible by customers. Select two or three names for your business and then do the following:
a) “Google” your business name to see if any other company is doing business with your name and is offering similar products or services;
b) Go to the US Patent & Trademark Office (USPTO) web site found at: http://uspto.gov/ and on the left side menu click “Trademarks”. In the menu that opens up choose ” Search TM Database (TESS), type in your name to see if anyone has, or has filed, a trademark registration for your business name;
c) Finally, search a WHOIS domain name database http://www.networksolutions.com/whois/index.jsp to see if your business name is available as a domain name.
If no other business appears in your Google search and you find that other businesses have not filed a similar registered trademark or domain name, then you can feel somewhat confident (but still not 100%) that your business name does not infringe the trademark of another business. After completing your research, you should register your business domain name (.com and .net extensions are the most popular).
2) Corporate Formation: For a host of reasons, including but not limited to protecting your personal assets (your banks account, car, etc.) from being subject to judgment in a lawsuit against your business, you should consider forming a corporation or organizing your business as a limited liability company or limited liability partnership. There are different benefits to each type of formation; a helpful description of these business types can be found at http://smallbusiness.findlaw.com/. Whichever type of corporate formation you choose, you will have to file the appropriate forms with the Secretary of State’s Office in the state where you are located. It takes approximately two weeks to receive confirmation of your corporate formation.
3) Trademark Filing: With your business properly incorporated or formed, you can proceed with filing a trademark application for your business name. You can file your application online at the USPTO at http://www.uspto.gov/teas/eTEASpageA.htm ).
4) Tax-Related Considerations: After forming a business, you need to have a Federal Tax ID Number Employer ID Number (even if you don’t have any employees except yourself). You can apply for an EIN on line using the Internal Revenue Service website located at http://www.irs.gov/businesses/small/index.html. This website is a great source of information for the small business and has very useful and informative publications about accounting and record keeping, preparing and filing your taxes, and ways to grow your business.
5) Drafting Web site Terms of Use: Once your online presence has been established and you are offering products and services online, you should publish terms of use for your Web site or an online agreement that informs the users of their obligations when using the site and states your limitation of liability and waiver of warranties related to your products and services. A good source for terms of use and standard legal agreements is found at the small business site: http://smallbusiness.findlaw.com/ or at http://www.uslegalforms.com/.
6) Obtaining Liability Insurance: In order to protect your business from certain legal risks, you should obtain an insurance policy designed specifically to cover your small businesses. Most businesses carry commercial liability insurance but a good way to determine which coverage is best for you is to consult with an agent for a reputable insurance provider. Or, you can answer a quick online questionnaire like the one offered by Hartford Insurance on their site http://www.sb.thehartford.com/determine_your_needs/. Through this survey, Hartford can analyze the needs of your business and suggest policies that are best suited for your business.
As mentioned previously, the above list of legal issues is not exhaustive. However, this list includes many of the most important key legal concerns when you are just getting your business started. After you get these basic legal issues resolved and your business is up and running, you should make time to consult with a general business lawyer and have that lawyer review your corporate filings, terms of use, standard contracts, and insurance to make sure everything is in order for you to optimize your chances for success.
- Statton Hammock. Director, Legal & Business Affairs, NetworkSolutions
*The information posted in this blog is provided for informational purposes. Legal information is not the same as legal advice — the application of law to an individual’s specific circumstances. The information presented is not to be construed as legal advice. Network Solutions recommends that you consult a lawyer if you want professional assurance that the information posted, and your interpretation of it, is appropriate to your particular business.
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