This is a contribution by Kyle Kroeger of Financial Wolves,
a blog about making money with side hustles to help you achieve financial freedom.

6 Legal Considerations When Starting an Online Business

You’ve got a banging business idea. You have the perfect product or fantastic service. You’ve got an excellent business team at your back. 

All that’s left to do is go online with your business and start raking in those dollars, right?


In this day and age, while it may seem incredibly simple to just go online, create a profile or page, and start your business, it’s rarely that easy. Once you actually get into it, you’ll face many hurdles and uncover various myths. 

Don’t think we’re trying to discourage you. Not at all. 

If you keep at it, put in the time and effort, and take the right risks, there’s no reason why your business should not succeed. 

What’s more, considering the fact that more than 90% of purchases will be done through e-commerce by 2040, building online business is definitely the place to be. 

However, all we ask of you is that you be a little careful and take a few precautions. Especially when it comes to legal matters, to avoid any problems for your business later on. 

So, think about this legal requirements checklist when starting an online business.



We all know how important it is to choose the right name for your business. Not only will it help others identify you, but it will also help you position your brand. It’s no different for an online business. 

However, using a name that is already registered by someone else can bring you a lot of headaches. Therefore, you want to make sure the name you’re using is available to use, and you’re not causing any trademark infringement. Don’t forget, just because the domain might be available, doesn’t necessarily mean that someone isn’t using that business name offline, so be sure to do your legal due diligence as a startup business and take the time to check.

You may not be ready to apply for a trademark of your own, but it’s essential to ensure that you’re not using someone else’s or it can put you in some hot water down the line, or if nothing else, cause you quite a bit of work if you find yourself forced to redo all of the branding work throughout your business.


Incorporate Your Business

Do you need to incorporate your business? Well, you certainly don’t have to, but If you wish to protect your assets and stay free of liability, incorporating your business is the best decision. This means that you register your business as a separate entity so that you are doing business as the business, rather than as yourself.

The most common way for small businesses is to register as a sole proprietor. This is relatively easy to do and doesn’t require a lot of paperwork. 

Alternatively, you can also register as an LLC or a corporation, which will give you even more protection. Even if you have a small blog you should consider registering your blog or site as an LLC. It never hurts to be protected.


Business License

Just because you’re operating online, doesn’t mean you’re let off the hook. There are still some procedures and rules that you need to follow and one of these is getting a business license. 

Now, this could vary from place to place, and your local laws might not require you to get a business license to run your online business. 

But when it comes to such matters, it’s always better to be safe than sorry. 

Therefore, check with your local business guidelines if you need to obtain a business license for the kind of business you’re running.


Privacy Policy

Unlike physical stores, where a customer might come in, pay in cash, and leave, online businesses usually require more information during any transaction. 

They might ask for customers’ postal address, credit card information, or other sensitive information. Now, as a business, it’s your responsibility to make sure all that information is protected and doesn’t fall into any wrong hands. 

So, you need proper privacy controls and policies which are set in place and followed by your employees as well.


Copyright Materials

When you’re designing the page or website for your online business, you’ll be tempted to include all kinds of cool pictures, videos, music, etc. After all, who doesn’t want a visually appealing webpage?

But just hold on a minute now. What sort of legal requirements are there when using images or music for your website?

Are those pictures, videos, music, your creation? Or did you just pick them off somewhere on the internet? 

If it’s the former, then you’re good to go. But if it’s the latter, you’re exposing yourself to the risk of copyright infringement suits. These infringements can put all of the money you’ve made online at risk. 

You want to make sure that any content you use on your website is your own creation or something you’ve paid to use. This includes many things such as: 

  • Pictures
  • Videos
  • Music
  • Text
  • Product photos
  • Drawings
  • Sound recordings



If you thought you’re free from taxes just because you don’t have a physical store, we’ve got some bad news for you. 

Regardless of whether your business operates online or offline, you still have to pay tax on it. The exact amount may vary according to where you live and the nature of your business.

You should talk to your local tax authorities and find out precisely what the tax structure is going to be for you.

This will also help you paint a more accurate picture of the finances of your online business.

There are plenty of fantastic small business accountants who are willing to help you get set up for minimal cost and can also help walk you through the benefits of the different incorporation options and their repercussions on your taxes. It’s worth while to set up a meeting with a local accountant if you can make it happen. This will take a lot of pressure off of you and time worrying about tax implications can be spent on building your business.


Final Words

When it comes to legal considerations for your small business, a lot of it has to do with where you’re living and your particular situation. Your local government and its rules and guidelines will affect various aspects of your business. So, it’s always a wise idea to look up some of the local business practices and regulations and stay up to date on the ever changing regulations for web based businesses.

Our list of legal considerations when starting an online business should be a good starting point for you, but it’s important to do as much research as you can when it comes to your startup legal checklist as every business has its own nuances and needs. If you’re ever in doubt, we always recommending setting up an in person meeting with an accountant, tax attorney, or other expert in the field who can walk you through the steps and be sure you’re business is set for success.


Author Bio: Kyle Kroeger is the owner of Financial Wolves is a blog focused on helping you make more money to achieve financial freedom. After repaying student loans, I’ve shifted my focus to make more money from side hustles, real estate, freelancing, and the online economy. Follow us on Pinterest, YouTube, Twitter, and Facebook

Kyle Kroeger

Kyle Kroeger

Kyle Kroeger is the owner of Financial Wolves is a blog focused on helping you make more money to achieve financial freedom. After repaying student loans, I’ve shifted my focus to make more money from side hustles, real estate, freelancing, and the online economy. Follow us on Pinterest, YouTube, Twitter, and Facebook.

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