Simple online business startup guide: the legal work you need to launch an online business
Updated: 8 December 2019
My aim in this article is to help you take the stress out of your online business launch.
And for the startups after some extra help, our free online business startup checklist is available at the end of this post for you to download.
In a hurry? Jump ahead.
Founders & workers
The founders and personnel category is first.
Why ? It pays to get your foundation, before going to market with any of your offerings.
A founder agreement sets out the founder's roles and duties, resource contributions and any work targets.
So who exactly are the founders ?
The founders are the people that first bring the startup idea to life and/or to the market.
In addition, worker agreements set clear expectations. Read on to learn more.
Worker agreements include employee and contractor agreements. Both can protect your startup.
So what are the key parts of a worker agreement ?
Worker agreements include details of how a worker will be paid and protection clauses like non competes, confidentiality and intellectual property clauses.
And what about international contractors helping you ?
Complying with your startup’s home country laws is a given; but it also pays to know about laws that may apply in your worker’s country.
Because one of the big risks you want to manage is getting your worker categories right. In other words, are the workers really an employee or contractors?
You might be interested to learn that in Australia there are penalties for sham contracting; calling someone a contractor when they really should be an employee.
Tip: If you will be working with the same worker type over again e.g. software developers, a lawyer may be able to draft a reusable agreement for you.
So what are customer legals ?
Terms and conditions
Usually, your terms and conditions will be on your website.
However, in some cases, an offline client agreement may be more suitable than online terms for complex or bespoke terms for each client you work with.
Your client agreement may compliment or may even replace your online terms and conditions, read more below.
Client agreements may be more suitable for clients that qualify for special terms that are not available to all your other clients.
Now, for those clients, a client agreement can set out the special terms that will apply to them only.
And because you are applying special conditions, you likely won't want these terms to be online for the world to see.
And in case you are wondering, GDPR stands for General Data Protection Regulation.
So why does it matter ?
Because if you are selling your product online, you may be attracting mailing list sign-ups from all over the world.
Your sign-up's may include residents of the European Union. And there are rules about how the data of people in the European Union must be handled.
Now, investors are another important group to consider, we'll discuss this group next.
Terms of agreement , heads of agreement or term sheets usually follow a successful investor funding negotiation (they usually mean the same thing).
Ideally, investor terms will at a high level, set out the key terms for funding.
Non-binding terms with an investor are particularly helpful for your startup if you don't yet have a lawyer helping you.
And the term non-binding means that you won't be legally bound by the investor terms at that point before you get legal help.
The agreements you may have with investors include a share sale agreement and shareholder agreement.
What about your suppliers ? To learn about suppliers for your online business, read on.
Some larger suppliers are likely to have their own contracts that they expect your startup to sign.
So should you sign a large supplier's agreement or get advice first ?
It's a good idea for your startup to have these supplier agreements reviewed by a lawyer.
Even if you think that a large supplier has a one contract fit's all work style, many large supplier contracts can and should be negotiated especially when there are aggressive terms.
Also, keep in mind that when you are working with smaller suppliers, you may need to have a supplier agreement drafted from scratch if there is no agreement in place.
The bonus download below outlines what usually goes into all the agreements discussed this post.
A checklist of what should go into an online business's legals.
Got questions or comments about setting up an online business? Be sure to leave them below.
I wish you success in your ventures!