How to Legally Protect Your Business

The world of online business and entrepreneurship takes grit, patience, and time. Sure, the idea of being your own boss while you work away at that dead-end job can sound liberating and pretty. But being a business owner isn’t as glamorous as you might think (or hear about on social media). 

That sparkle can QUICKLY dull once you dig even just a little bit into the Hows, Whys, Whats, and How Muchs. If you’re going to build a business that is sustainable and scalable for whatever service, product, or offer you sell, you can’t forget about the most important foundation: legal protections!

If you’ve spent any amount of time searching Google for things like LLCs, business insurance, and such, you’ll know there’s no one-size-fits-all answer here. Each of those rich with options and choice alone. You’ll also have to consider that legal-proofing your new business dramatically varies based on what country you live in and even what state your business is registered in.

The good news (yes, I promise there is a surprising amount of that for you) is that I’ve compiled all the essential information for you here! So, let’s dive into the most common legal holes general business owners and entrepreneurs often have questions or concerns about.

In this blog post, I share some juicy nuggets from my conversation with Kimberley Odums, lawyer, entrepreneur, and creator of Contracts With Kim

You’ll learn how to protect your business in each of the following ways:

  1. Business Entity - LLC vs Sole Proprietor
  2. Contracts
  3. Website Terms & Services + Privacy Policies
  4. Business Bank Account
  5. Business Insurance
  6. Answers from a lawyer

Business Entity - LLC vs Sole Proprietor

Once you enter the marketplace and you exchange your services or goods for money, you open yourself up for liability - no matter how small your business is. 

Setting up a business entity is one of the first things a business owner can do to protect themselves legally… yet many don't. Like a house needs a foundation, your business won’t last without some clear structure. 

I’ve seen a lot of people try to fit their hobby into a business without much success. And the reason for that is simple. They’re not setting up their business the right way. 

As a business owner you HAVE to protect yourself and assets. This includes your earnings, your property, and your revenue: not just your personal revenue but also your business revenue, too. 

One of the major differences between these two popular entity types is that if you are set up as a Sole Proprietor, someone suing you could go after your personal assets AND your business assets. A Limited Liability Company (LLC) offers a bit more protection. If you’re the target of a lawsuit with an LLC, your personal assets (like your home) won’t even be on the table.

When incorporating your business, an LLC structure is what most of my clients prefer. They’re easy (for the most part) to set up, and an LLC offers more protection (especially if you think you might hire someday). But if you’re not operating your business like an LLC, the safety net disappears. 

The easiest way to keep yourself protected with an LLC is to separate your personal and business finances (more on this below).

Business Bank Account

If you’re in business, you NEED to keep your personal and business finances separated. PERIOD. Choosing to skip this step may cost you those liability protections I mentioned.

So, it’s important you have a different place to park and manage your business’ money. Doing so will also spare you of a lot of headaches come tax season, since everything will be all in one designated place already.

Some business bank accounts found at your local brick and mortar banks cost money and/or require some sort of minimum deposit upfront. But there are actually more free options you may not have heard about.
All reputable online business bank accounts are FDIC insured, and often pack more punches than traditional bank accounts offer to new business owners.

Here’s a list of free freelancer and entrepreneur friendly business bank accounts to check out if you’re ready to legalize your finances:

Nobody likes to think about getting sued, but it could and does happen. It’s up to you to protect your business. No one else will do it for you. You never think it will happen to you until it does and in that moment, you’ll wish desperately that you had set up some basic protections earlier on. 

All of your business’ money should funnel in and out of this separate bank account. You can absolutely transfer funds to your personal bank account once you generate sales, but you should never have personal expenses coming out of your business account. You should likewise have all business expenses coming out of your business account (not your personal one). 

For extra protection, make sure it’s your business’s name on the account and not your personal name. Always take the extra step of having all of your money (even money you pay yourself with) visit your business bank account first before drawing it out.


Any time you engage in an exchange of services with someone, it is crucial that you have a legally binding contract in place. 

Contracts should be non-negotiable in your business. They help clarify your business relationships by making terms and conditions, when written correctly, crystal clear.
Things your clients/customers should not question can include:

  • Your prices
  • Your scope of work
  • Your termination policies
  • Your confidentiality conditions
  • Your copyright or ownership terms
  • Your work delivery workflow

Your contract protects both you AND your clients or customers. It answers questions like what tasks you will do, how you will deliver that work, when (and how) you’ll show up, and more. You don’t want these things to be murky.

The most important role your contract plays in your business is helping manage everyone’s expectations. I have learned the hard way that not having a contract creates conflict and tension down the road. So I use it to make everything abundantly clear from the beginning so there are no misunderstandings later. 

If you are a business owner hiring an independent contractor, you might already have your own agreement. If the person you are hiring has their own agreement as well, this is a good time to look them both over and merge the two together. Working with an attorney to do this is the wisest decision.

If you are in need of any done-for-you contracts, Kimberly has the absolute best ones available. I have several of hers and they really set my business up for success. If you use code FIRST15, you can get 15% off too!

Website Terms & Services + Privacy Policies

If you have a website, protecting your content and disclosing what information you collect and how you use that information is a must. Seriously. 

You can protect your website by setting up these basic things:

  • Copyright notice in the footer (that’s the very bottom section of your website)
  • Privacy policy
  • Terms and conditions
  • Disclosure statement

We live in the age of personal information collection. If you have an email list, you’re collecting personal information. So whenever you collect personally identifiable information via your website, you need to have a privacy policy. 

Privacy policies can get oversaturated with mind-crunching legal terminology, but solopreneurs and small business can usually start with a few basic things, including disclosing that you collect information like:

  • First names
  • Addresses
  • Email addresses
  • Credit card information 

Collecting ANY combination of those means that you must have a federal privacy policy with a number of things in it. If you are overwhelmed with what you need to include (because it’s a lot of legal jargon that makes my mind want to explode), you will really love Kimberley’s done-for-you Privacy Policies

Affiliate Marketing & Blogs

A lot of people also use their blog to generate revenue. To generate this revenue, many will include affiliate links throughout their blog posts. 

When you're being paid each time your readers click these special links or you're getting some type of kickback for purchases readers make through your affiliate links, the FTC requires that you make this apparent. 

It is not necessary to put this disclosure on every single blog post, but you should definitely have it in your terms and conditions. 

Here is the exact statement I have in my Terms:  

“Megan Lloyd Company may be an affiliate with various products and services. You may find these affiliate links in blog posts, coaching calls, podcasts, and more. This means that at no additional cost to you, Megan Lloyd Company may earn commissions if you click through certain links and make a purchase. Although Megan Lloyd Company only recommends products and services that we think could actually benefit our customers, you agree to not hold Megan Lloyd Company responsible for any negative experience you may have with any affiliates. You also agree to contact those specific companies for product support should you need any.”

Disable Right Click

Protecting your content is important. This blog post by FixRunner is a great resource that allows you to disable the right click feature so others can't copy your blog. It can make visitors upset, but it also protects your content.

Check your plagiarism

You can use this free plagiarism checker tool to check your own writing to be sure it's not too similar to someone else's and to see if others have plagiarized your content.

Business Insurance

Depending on your situation, you might find it really helpful to get insurance for your business. The whole point of carrying insurance for anything is because of one word all business owners should be cognizant of: risk!

Sure, no two businesses are the same. A shirt making company won’t carry the same risks as say a virtual assistant in the healthcare field. 

As a business owner, it’s really up to you to decide if you think carrying any amount of insurance for your business. A few types of insurance you can consider include:

  • General liability insurance
  • Errors and omissions insurance
  • Professional liability insurance
  • Medical malpractice insurance
  • Cyber security insurance

Most of those types of coverage won’t necessarily apply to solopreneurs, service providers, and business owners. But knowing your options and being aware of the risk your business carries in your everyday life is just one more way you can protect your personal assets as well as your business.

I personally have Professional Liability Insurance through PCRG Insurance. I pay about $40 per month for 1 million dollars of coverage. It means if I were ever sued, I would never pay more than $1,000 (the deductible). It covers all my attorney fees so I can sleep peacefully at night knowing I won’t have any major surprises. 

Affordability remains among the top concerns for business owners: new and seasoned. In my experience, MANY business owners use a service called Hiscox. They've all said great things. It's talked about and respected in the online business owner space quite often. 

Answers from a Lawyer

During my conversation with Kimberley Odums,  she shared some additional wisdom and insight about the most popular legal questions business owners have.

Kimberley is licensed to practice law in New York, Massachusetts, and Connecticut and has over 12 years of experience representing some of the world's largest companies (like Amazon, MGM, and others).

How can biz owners protect themselves and their 1099 independent contractors better?


Remember that independent contracts are not employees. Employees are entitled to things such as vacation, health insurance and benefits. Independent Contractors get to dictate the working relationship as much as the client including the days/hours they work, services they do or do not provide, and more. Having contracts in place can help clarify these things as well.

What is the one clause that everyone needs in their contracts?

The indemnification clause should not be left out. This helps each person within a working relationship to be protected if the other party is sued. It will give you another layer of peace of mind.

Here is the Indemnification Clause I have on my website: 

“You agree to defend, indemnify and hold harmless Megan Lloyd Company and its licensee and licensors, and their employees, contractors, agents, officers and directors, from and against any and all claims, damages, obligations, losses, liabilities, costs or debt, and expenses (including but not limited to attorney's fees), resulting from or arising out of a) your use and access of the Service, by you or any person using your account and password, or b) a breach of these Terms.”

Are multi-level-marketers protected by the corporate company’s legal team?

Not always. There might be some basic level protection, but as a business owner, I would still look into what that coverage is, if anything.

Working with Kim

If you are ready to protect your business as an assistant, coach, multi-level marketer or more, she has several different services to choose from:

  • Done-for-You contracts
  • Schedule a coaching call with Kim $200 per hour
  • Kim's legal resource membership
  • Contact Kim:

I did her coaching call and had her review existing contracts. It was SUCH a great experience and I have way more peace of mind than before.


We’ve unpacked quite a bit of information here. So before you head out, I want to leave you with a quick checklist and summary of everything I’ve mentioned today. 

Here’s a quick recap of the things you can do to protect your business legally: 

  • Set up a business entity (Sole Proprietor or LLC)
  • Create a business bank account with your business name on it. 
  • Consider getting business insurance.
  • Start using a contract with all of your independent contractors and clients. 
  • Beef up your website's Terms and Conditions plus your Privacy Policy (or create one of both if you don’t have either). 
  • Add a copyright at the bottom of your website. 
  • Include the indemnification clause in your contacts and website. 
  • Add a disclaimer to your contracts, websites, and socials if you offer affiliate links.

Happy organizing! 

Disclaimer: the information in this blog post should not be taken as professional advice for your specific situation. The above opinions were taken from an interview with Kimberley Odums and may or may not reflect her perspective. It is highly recommended that you seek out individual support and 1-1 advice.

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