The online world can be a messy place for legal advice. I’m going to discuss some of the biggest and most dangerous legal myths I’ve seen, such as LLCs versus sole proprietorships, using free contracts when starting out, whether it’s true that the online world is a Wild West, and whether you really need an LLC or business insurance – or both.

In this episode, you'll hear… 

• 02:21 - The dangers of following anonymous online advice
• 05:20 - Know-it-all Facebook ad comments
• 07:50 - The myth of waiting
• 13:58 - LLCs vs. sole proprietorship
• 16:32 - Copy-pasting someone else’s contract
• 21:36 - The internet is not The Wild West
• 22:53 - The difference between LLCs and business insurance

RESOURCES:

• Top Legal Mistakes to Avoid for Online Businesses (blog post)
• Top Legal Mistakes to Avoid for Online Business Guide (PDF downloadable guide)
• Episode #2: “Scope of Practice for Coaches: What You're Legally Allowed to Do” (podcast episode)
• 7 Legal Myths Keeping You From Being Legally Legit (blog post)
• Why Free Legal Contracts Wouldn't Cut It for Kristen Zavo (interview recording)

LEARN:

• Join my free Legal Workshop “5 Steps to Legally Protect & Grow Your Online Business” here
• Read Sam's Blog for the latest legal tips, podcast episodes & behind the scenes of building her 7-figure business.
• Listen to our customer stories to see how getting legally legit has helped 1000s of entrepreneurs grow their own businesses.

CONNECT:

• Follow Sam on Instagram for legal tips, business-building advice & daily food + Hudson pics.
• Like us on Facebook
• Follow my podcast, On Your Terms®, on Instagram so you catch all our episodes
• Subscribe and follow on all podcast platforms and activate notifications for new episodes
• Apple Podcasts
• Spotify
• Google Podcasts

FAV TOOLS:

• Kajabi // use Kajabi to sell your course, program, or even build your entire website. Get a 30-day free trial with my link.
• SamCart // what I use for my checkout pages and payment processing and LOVE. And no, not because it’s my name.
• ConvertKit // what I use to build my email list, send emails to my list, and create opt-in forms & pages.

DISCLAIMER: Although Sam is an attorney she doesn’t practice law and can’t give you legal advice. All episodes of On Your Terms® are educational and informational only. The information discussed here isn’t legal advice and isn’t intended to be. The info you hear here isn’t a substitute for seeking legal advice from your own attorney.

On Your Terms® is a production of Crate Media.

Mentioned in this episode:

Legal Workshop

Do you feel lost thinking about how to legally protect your online business? Head to mylegalworkshop.com to sign-up for immediate access to my free 1-hour legal workshop, 5 Steps to Legally Protect & Grow your Online Business.

Legal Workshop

So, before we start today's episode, just remember that although I am a attorney, I am not your attorney and I am not offering you legal advice in

This episode and all of my episodes are informational and educational only.

It is not a substitute for seeking out your own advice from your own lawyer.

And please keep in mind that I can't offer you legal advice.

I don't ever offer any legal services, but I think I offer some pretty good information.

One more thing before we get started, also remember that I am based in the United States, so that's what I'll focus on today.

With that, let's actually get into it.

Hey, friend. Welcome to the On Your Terms podcast.

I'm Sam Vander Wielen, an attorney turned entrepreneur who helps online coaches and service providers legally protect and grow your online business using my DIY

trainings.

And on this show, each week, I bring you fresh tips on how to legally protect your business, but I also teach you how to grow that business on your terms,

It's not just building a cookie cutter business or the one that you see on Instagram, but actually doing the stuff on your terms.

So, in this episode, we're going to talk about some of the worst legal myths that I see online.

Some of the really bad and funny Facebook comments that I've even gotten before on my own stuff from non-lawyers teaching me how to be a lawyer.

And we're going to talk about some of the things that I just feel like you need to know whether it's about LLC versus sole proprietorships, or whether you can

free contracts until your business gets bigger, whether it's true that the online world is the Wild Wild West and there are no rules, and whether you

insurance or both.

We're going to go over all of that today.

I'm so excited to get into it.

As always, keep in mind that although I am a attorney and a licensed attorney, I am not your attorney and I'm not able to provide you with legal advice.

And this episode is informational and educational only.

It is not a substitute for seeking out your own advice.

With that, I can't wait to get started.

If I had a dollar for every piece of absolutely terrible trash advice that I saw in Facebook Groups, or on Instagram, or in courses that I've

been in, or something like that, I would be a billionaire because I have seen so much bad legal advice online.

And funny enough, it always comes from non-lawyers.

So, I know sometimes people are just trying to be helpful.

I also know, though, that a lot of really bad myths just somehow have caught on in our industry.

And I hear them being repeated all the time.

And I'll ask people sometimes who share these things like, "How do you know that or what makes you think that?" And they'll just be like, "Well, someone

mastermind," or something like this.

And it's like, "Yeah.

This is how bad stuff gets perpetuated."

So, we've got a lot of bad information floating around online, and it leads to two major things.

So, one, it leads to a lot of bad problems coming from it.

People actually go and take this advice.

That's what makes me nervous, especially when somebody is actually giving out this advice who maybe has a position of authority, and people trust them, and

And then, you guys are taking that advice and thinking that you're doing the right thing and you don't know any better or any different.

And so, it turns out to be wrong.

And that either leaves you unprotected or just not confident, which is the second big thing that I see.

Besides the actual bad stuff that comes as a result of believing these myths, is that I see this pattern - and I have seen this now for

four plus years - where people just stay in this cycle of distrust or nervousness that they've got the right stuff in place to be

legally protected.

So, instead of actually moving forward with your business, or launching the program, or taking on more clients, scaling, investing in Facebook Ads, whatever

I see so often that people are just like, "Oh, I don't know, because that information that I got or that person's advice, I know that they told me that I

need to do X, Y, or Z, but I've got this little nagging thought in the back of my head that that's not right." And because you have that nagging thought, you

actually move forward with things.

So, I see so often people will be like, "Oh, yeah.

I have a contract. I just don't know if it's any good." Is that you?

You can tell me, be honest.

But this is a no judgment zone here.

But it's really important that we kind of weed out what is the nonsense online, what are the myths.

And one of my goals in my community, in general, is just to provide you with the information that you need so that you don't have to look elsewhere.

You don't have to look to free Facebook Groups or your friend who's not a lawyer.

There are other lawyers, you can consult your own lawyer, like all of that kind of stuff.

I'm not saying I know everything.

I definitely do not.

But I'm just trying to give you a safe space to learn about this stuff without having to sift through the nonsense.

So, I want to tell you a little story before we hop into the five worst myth that I see online, it's about Facebook Ad comments.

I feel like I could have 20 episodes dedicated to Facebook Ad comments - let me know if you want to hear one.

But since I started running Facebook Ads about a year ago, every once in a while, you get a nasty comment, or you get a troll, or you get somebody who's

And the other day I did an Instagram Story where I talked about the three categories of Facebook Ad comments, and one of them is the know it all.

So, there's always someone on one of my Facebook Ads teaching me and teaching everybody else, who, by the way, this person never once been a lawyer.

So, it's a non-lawyer person commenting on my ads, telling me how they actually know the real information and I don't.

My favorite one was one recently about copyrights, where this person was like, "This is so stupid.

You don't need to watch her workshop to learn how to copyright something.

I'll tell you how to do it." And she launches in her comment telling you how to improperly register a copyright.

So, not only is this the way that often get perpetuated online, it's also if she would go back and listen to Episode 2 on scope of practice.

It is a non-lawyer giving out legal advice, so it's the unauthorized practice of law - just a side note.

So, you shouldn't be giving out advice like that.

I always battle when people leave Facebook Ad comments, more when they're mean or something.

It's like, "Do we just leave this?

Do we respond to it?" But in this case, I felt like I have to respond to this because if people read this and they think that that is true what she was

something and that counts as registration, which it does not.

It is something that they refer to in the industry as a poor man's copyright.

It is not as enforceable as registration.

So, that is a myth. It's not one of the myths we're going to be talking about today, but it is a myth.

And so, she was telling people to go off and do this.

And it puts people like me and other people who run groups and courses and programs in a bad position, because you don't want people relying on this

Because if someone went out and did that, if they took her advice and they mailed it to themselves, and then got sued or needed to enforce their copyright

followed her advice.

So, that is the danger.

That is why I think it's important to address these legal myths to just bust through some of the ones that maybe you've heard before or some of the ones you

So, with that, let's hop into it.

So, the number one mistake or legal myth that I see online all the time has to do with waiting.

Like, just waiting overall.

The, "I don't need to form my business until I'm bigger." Or, "I don't need to do X, Y, or Z until I make more money.

I don't need contracts yet.

I don't need business insurance yet." Like, whatever it is.

So, one of the problems with this myth is that people don't understand that you don't have to have money or to work with clients to

get sued in the United States.

So, in the United States, you can get sued for just the content that you talk about.

It doesn't have to be only your work with clients.

Of course, your work with clients is riskier than your free content.

But your free content still takes with it some risk.

So, don't make the mistake of thinking that just because someone's not paying you money, it doesn't matter.

I feel like that also kind of translates to the "once I make more money kind of thing" because it doesn't really matter.

The risk is still there and you still need protection.

Of course, as you make more money, as you work with more people, the level of protection can increase and the level of risk increases relative to how much

And so, that's fine.

I'm not one of those lawyers that says to you like, "From the moment that you start, you have to have nine million things in place." No, I teach people the

Like, you have to have a well-rounded, holistic, protective system around you, but it doesn't have to be anything crazy.

That's why I do what I do. I'm trying to make this as simple as possible.

And so, I think sometimes people think that it's like, I'll wait because my legal protection is going to be so huge, and complex, and expensive, and

But it's not going to be.

It doesn't need to be in the beginning.

It can be relative to what you're doing and it can increase as you go along.

It's something that can change and improve as you go along.

The other big problem with this myth, though, about "I can wait until X, Y, or Z happens" is that protection isn't retroactive.

So, if you wait and you get protection later, then whatever you did before you registered, or got business insurance, or whatever it is that you're going to

it's not protected.

So, that client that you started working with, they can sue you.

So, people will say to me all the time, "I'm going to wait until I make a little more money, and then I'll get a client contract, and I'll go back and I'll have

That's not how it works." You can't, first of all, ask someone to sign a contract that applies from before.

And so, this would be for your relationship from that point moving forward.

So, we wouldn't want to go about that approach.

But also going back to the first part of this myth, you are left unprotected that whole time that you are working with someone.

And it doesn't matter that you don't have any assets.

So, a lot of times when it comes to the waiting myth, people will say to me, "I don't have any money," so I call it the come at me, bro move because people will

Come at me, bro." That is not a real thing.

So, if you do not have assets, meaning that you don't have money that someone can sue you for, people can still sue you and then you will still owe money.

Whether or not you have the money doesn't matter.

So, there are things called liens.

And like all this scary stuff, I don't even want to go down that road.

It doesn't matter because I just believe in getting very, very basic, simple legal protection in place so that you don't even have to worry about this stuff.

I'm not here to freak you out.

So, number one tip and number one myth is that we don't want to play the waiting game.

We don't want to get contracts later because that stuff's not going to apply.

It's not going to cover you. And it doesn't matter how much money you have now.

Your first client can sue you.

Your tenth client can sue you.

Or forget suing.

Sometimes I even fall into the trap of just talking about lawsuits, because that's what so many people ask me about.

But that's actually not in reality what most people are dealing with day-to-day in terms of risk in their business.

So, day-to-day, as a coach or an online creative, you're going to be facing more people wanting their money back, or people canceling their calls, people

for more than what they actually paid for or signed up for, people sharing your content improperly.

That's going to be the stuff that comes up.

And if you don't have a contract or something like that or whatever, you're not going to be able to do anything about it.

So, it's a minimal thing to just get in place that's going to make a huge payoff, I think, in the

end.

Have you ever felt lost about where to begin with the legal side of protecting your online business?

Some people say you can just wing it at the beginning and get officially set up later.

Not a good idea, by the way.

Whether you're afraid to even start working with clients because you don't want to do something wrong legally and then get in trouble or your business is

pieces, I've got you.

I don't want you to live in fear of the internet police coming after you and your business, but you do have to do certain things and get certain things in

online. As much as it just feels like an unregulated Wild Wild West online, that is very much not the case.

As an attorney turned entrepreneur and former corporate litigator, I can assure you that there are rules.

There are real steps that everybody who runs or starts an online business needs to take.

And you're not behind at all.

We can get you set up and following the rules right away.

In fact, we can even do it today.

I want to teach you the five very simple steps to take to legally protect and grow your online business.

You don't need an MBA to be a successful entrepreneur and stay out of legal hot water, but you do need to dot your legal I's and cross your T's in a few key

That's exactly what I'll teach you in my free one hour legal workshop called Five Steps to Legally Protect and Grow your Online Business.

Just head to mylegalworkshop.com, drop in your email address, pick the time, and I'll send you a link to watch the workshop video whenever you have time.

This is the best place to begin if you're just getting started legally legitimizing your business, so head on over to mylegalworkshop.com and sign up

Business now.

Myth

number two relates to LLCs versus sole, more overcomplicating than they need to be.

They are not as difficult and expensive as most people think.

Now, of course, there are exceptions, like places like California, LLCs are significantly more expensive only because they have this franchise tax that you

There are some states that have a higher registration fee.

But in most states, the LLC registration fee between a sole-prop and an LLC is minimal, it can be anywhere from $25

to $100, and then up depending on some of these outlier states.

But, overall, it is not that much more expensive.

I think it just gets overblown.

But the thing that's always left out of this myth conversation is what you're paying for in that difference.

So, people aren't telling you that sole proprietorships don't offer you any individual personal liability protection, which means that you and your

thing. And if your sole proprietorship gets sued, your business gets sued, then you get sued.

And that means you are personally liable for whatever happens from your business.

Whereas with an LLC, in most states, you can own an LLC by yourself and you can try to insulate yourself as much as possible with what's called limited personal

protection, which is what an LLC affords you in most states in America.

And so, that is a huge, huge difference that would be, in my opinion, well worth the registration difference.

Now, the other big part of this myth is that somehow your taxed differently as an LLC.

I've heard everything from like, "Oh.

What about the LLC taxes?" And I'm like, "In America, if you register an LLC by default, you are taxed as a sole proprietor in the eyes of the IRS." I know

it's confusing, but you are taxed the same way as if you had registered a sole proprietorship.

And so, you're not paying any sort of mysterious additional layer of taxes when you just have an LLC by yourself.

It's not until you elect to have S-Corp taxation for your LLC that you are taxed differently as an LLC owner.

That is a whole another ball of wax that we can address on another day.

If you want me to even have an episode on S-Corp, let me know, I'd be happy to do that.

That's what I have.

But that is really when the different taxation status kicks in for having an LLC.

And by the way, little sneak preview.

An S-Corp is just a taxation status by the IRS.

It is not a type of business.

So, a lot of people get that confused.

Another myth, we can add that to the list.

So, myth number three is something around the like, "I can use the contract that my friend gave me until I can get by," or, "I can copy and paste my website

because they do what I do." So, there are, actually, three issues here.

So, one is that, it could be theft or copyright infringement when you take somebody else's website policies off their website or their

contract when you don't ask or have permission.

But even when you have their permission, they might not even have the right to give it to you anyway.

Because if they bought a template from somebody like me, for example, I don't give them permission to do that, so that wouldn't be okay.

Or if another attorney wrote it for them, it wouldn't be oaky with that attorney or whatever.

So, that's not a good idea.

But even beyond all of that, it could just be that it's not helpful to you.

Because a lot of times what I hear from people is like, "Oh, my business coach gave me a sample contract," or, "said I could use hers," or, "my friend is also

same people who are reaching out to me being like, "Oh.

I don't need a contract because my friend gave me one." But then, they're reaching out to me asking questions, and I say, "So, why are you reaching out to

send it to anybody, and I'm terrified if someone asked me about it." And I'm like, "Well, that sounds like it's going really well for you."

So, it's not a great idea to do this for many, many different reasons.

But I think more than anything, because you are not going to know how to customize it to make it your own, you're never really going to feel very

And as I always say, you don't know where their blanks were.

So, if they customized it as a template or got it from an attorney and paid for one custom, you don't know where the pieces are that are able to be customized,

customize given your business.

And you want something that's more of a living, breathing document that you can continue to change as your business evolves.

I think one of the things that my Ultimate Bundle members and my legal template purchasers love the most is that they can go back into these documents at any

video tutorials. So, it's really helpful to have something of your own for that reason.

But I also see so many people stay stuck in this cycle of wondering if what they have is good enough because they got it for free.

So, they're like, "How good can it be?

How can it really protect me?" And sometimes I feel like people stay stuck in that cycle because they know deep down inside subconsciously that it's not good

It looks kind of junky. You're not really sure if it covers you.

So, I just think that it'll make you feel better to know that you've done the right thing, you have something you've been able to customize, you can sleep

off. I want to share a quick story with you about what one of my Ultimate Bundle members, Claire, who said, before she joined the Ultimate Bundle she had

or borrowed a contract from one of her coaches.

And she just assumed that if her coach was using it, it was good.

That is another big problem I see with this assumption here, is, taking free contracts from your friends, or from your colleagues, or coaches, or whatever,

that they've done the right thing and they've got a legit contract.

But I think that that's often how these bad contracts just keep getting pushed down the hill here.

So, that's what happened to this person.

And so, before she got the bundle, she had this contract.

She thought it was fine because her coach gave it to her.

She was in the State of Washington.

She had a client in the State of Florida.

Something went south with this client and the client sued her in Florida.

So, the person that I know who ended up purchasing the Ultimate Bundle later after this happened, she had to hire a lawyer in Florida.

She had to travel to Florida.

She had to also have Florida law applied to her and what she was doing, which was worse for her than if Washington's law applied.

And that's when she found my stuff because she started to realize she needed her own legal stuff.

But one of the things that she learned through getting my legal templates and being in my community was that, for example, there's this thing called a choice

where you can be sued.

Like, in what state, what county you can be sued if you were to ever be sued, and what state's law applies if you are sued.

And that is really, really important, as you can see in this case, because you only want to be sued in your home state.

One, because you don't want to travel and hire a lawyer in another state.

But, two, you then don't want that other state's law to apply to you.

We don't always know if your state's law is going to be the best law, but we don't want to gamble with 49 other options when we can control the one that we

So, that's just an example of one little thing that was missing that ended up coming back to bite her because she just didn't know.

And how would you know, I had never heard of this before.

I would have never known before I went to law school what these clauses were or what any of this meant.

You know, it's not your job. You're not supposed to know what this stuff means, but it's also why we can't just trust that other people have done the right

It's also why it's so helpful to have your own contracts and templates and things like that, because you can go into the template.

In mine, for example, in the video tutorial, I would explain to you exactly why you needed to keep portions of that contract and what you can delete when you

That's one I would have told you.

You cannot delete it.

Myth number four is all about how people think that the online world is the Wild Wild West and there are no rules - woo-hoo, party.

So, I hear this all the time from people saying like, "It's online.

Nobody cares. This stuff doesn't apply to us.

We can do whatever we want.

We're totally unregulated.

There's no one watching over us." I hear this all the time, and this is not true at all.

If you haven't already, go back and listen to Episode 2, where I talk all about scope of practice, because that is where I talk about the fact that, first of

There are rules and laws that do apply to what we do.

Just off the top of my head, for example, there are email marketing laws that apply to us.

Like the CAN-SPAM Act, that applies to us.

And if you have an email list, if you're building an email list, if you have privacy policies, all this stuff applies to us.

That's just one example of many.

So, there are a lot of rules that apply to us.

And I explain in that Episode 2 that if there aren't rules that are directly related to what we do, the courts will find rules and they will apply them to

So, it is important that we're doing our best to be on the up and up in our business.

But I just hate people spreading this lie out there that there are no rules because that is not true.

And I think that you probably know it, and that's why you're here, and that's why you're listening.

But I just want to remind you that there definitely are rules.

Last but not least, myth number five is about how people will say that they are either going to get an LLC, or have business insurance, or they'll say to me

Like, "Oh, I have business insurance, so I don't need an LLC or vice versa." And this is a bad myth because these things are actually not related and they're not

thing. So, we've already talked about an LLC today, and LLC is a type of business entity.

It is a type of business entity that you can register in your state where you live and work.

And it is one of the only kinds that provides you what's called limited personal liability protection, which is that if you act like an LLC and if you

get this protection from having a business so that if you get sued, your business gets sued, but you're not personally liable.

Business insurance, on the other hand, is what financially protects your business.

So, if you got sued, your business insurance, just like any other insurance, would kick in for anything that you're sued for that's covered by your policy,

And they would provide you with a defense attorney.

They would pay that attorney's hourly fees, which I can tell you would be huge.

And then, if there's a settlement or judgment found against your business for something that's covered by your policy, then they would pay that, too, minus

That's why it's always important to know your business insurance deductible, and up to your policy limits, I should say.

So, considering your deductible and your policy limits.

So, these things are not related.

What I always say is that your LLC protects you personally and your business insurance protects your bank account.

Because even if you're protected personally, you don't want your business to have to be on the financial hook to pay for a lawyer or to pay for a settlement

against your business.

So, you would want both, theoretically.

If you are coaching, if you're providing professional services online, then you want some form of business insurance that's right for your business.

If you want to hear an episode on business insurance, let me know.

I talk a ton about business insurance in my community.

I'd be happy to bring that for you, even to bring on some experts for you.

But these things are not a one or the other thing, it's a both.

So, I want to make sure that we don't confuse this and we're not picking and choosing whether we're getting one or the other.

So, if today's episode was helpful, if you like to have something in writing like I do and see something in front of you, I'm going to drop the link in the

to Avoid for Online Business Owners.

I'll walk you through this stuff in more detail, so we'll make sure that that's in the show notes for you.

But overall, today, I hope that I just busted up a couple of the things that you might have heard about online, some of the things you might have heard that

I know that can't be right, but I also don't know what is right." So, I hope that we worked through that today.

If there are any other myths that I didn't cover today or that you want to know if it's true, make sure you reach out to me, DM me, ask me and let me know.

I would be happy to help.

And, of course, as you've been listening to this episode, if you found it helpful and you want to let your friends and peers know about this episode,

can reshare and get in touch with you, more importantly, and say hi.

I hope that these tips were helpful.

With that, I hope you keep building your business on your terms, and I can't wait to see you next week.

Thanks so much for listening to the On Your Terms podcast.

Make sure to follow on Apple Podcasts, Spotify, or wherever you like to listen to podcasts.

You can also check out all of our podcast episodes, show notes, links, and more at samvanderwielen.com/podcast.

You can learn more about legally protecting your business and take my free legal workshop, Five Steps to Legally Protect and Grow Your Online Business, at

And to stay connected and follow along, follow me on Instagram @samvanderwielen, and send me a DM to say hi.

2022 Sam Vander Wielen LLC | All Rights Reserved | Any use of this intellectual property owned by Sam Vander Wielen LLC may not be used in connection with the