Starting an internet business in California is relatively straightforward so long as you take the time to develop a plan and follow it. Let’s take a look at some general steps and issues you need to consider.
Why Start An Internet Business?
The answer depends on your particular motivation. For most people, the ability to sit in your sweats and work while everyone else is sitting in traffic is reason alone to launch an online business. Of course, you can also aim to go big and make millions selling off a site or going public with it. The web allows you to do all this with just the click of a mouse.
I cannot emphasize this enough. Research your business idea forward and backward. Most people refer to this as preparing a business plan, but I think most business plans are flimsy when it comes to planning online ventures here in California.
One area this is particularly true with is marketing. Make sure you understand all the different channels of marketing from search engine optimization to viral videos to social media. Creating effective marketing plans is where many businesses run into problems online.
Business Entity and Insurance
If you have room in the budget, forming a business entity and buying liability insurance is a smart move when starting an Internet business in California. As with an offline business, online efforts face risks and financial issues. By taking these two steps, you can protect your assets from the risks and liabilities associated with the company if it fails or runs into legal problems. We are talking about the ability to sleep comfortably at night.
Are you having a website built? Using a written contract is critical. Not only will it contain the terms of the agreement between you and the designer, but it must contain intellectual property provisions. Under copyright law, for example, copyright is automatically assigned to your designer. The designer must then transfer the copyright to you in writing or you don’t own the design. As you can imagine, failure to take this step leads to a host of problems down the road.
You need a disclaimer if you make a conditional offer to potential customers and clients. The disclaimer must also comply with the new FTC rules on disclaimers issued in April 2013.
You may want to file for a copyright on some aspects of your site or your business. For example, let’s assume you have a gardening site. You create an eBook packed with all your greatest tips and trends. You would want to copyright the eBook to keep others from copying and distributing the text under their name.
Most websites and apps are now interactive. Visitors can post content in the form of photos, text, comments, and so on. But who is liable if the content infringes on the copyright of another person? The Digital Millennium Copyright Act provides websites and apps with immunity from such liability. As you can imagine, we’ll want to take advantage of that option. Here’s a video on the topic if you would like to learn more now.
Trademarking is another smart legal maneuver. The typical move is to trademark your business name, slogan, and logo. The trademark process can take up to a year but is well worth it. Once registered with the Patent & Trademark Office, you can fend off anyone trying to misuse your marks or infringe upon them.
There are other issues you may need to consider as well. The exact list boils down to the type of site you run. If you allow users to upload content as Facebook and YouTube do, then you need to comply with the Digital Millennium Copyright Act of 1998. If you are targeting an audience in Europe, then you must take into account their privacy rules. The list goes on and on, so make sure to consult with an experienced and knowledgeable lawyer.
Can you start an internet business in California and be successful? Absolutely. If you canvassed your neighborhood, you might be shocked how many of your neighbors are already in business online in one form or another. Contact me today for a free consult on the legal issues you need to be mindful of and plan to protect yourself.
Richard A. Chapo, Esq.