You’ve probably heard these things before. They’re all true.
If you’ve been part of my community for a while now, you’ve probably heard these things before. They’re (still) all true.
1. Cover your buns legally BEFORE something goes wrong.
Why? To reduce risk, limit liability and head off problems proactively. It will keep you from stressing out if your client ghosts you. Or comes after you. Or having to spend boatloads on collections or legal fees. (Not fun!)
2. Cover your buns AFTER something goes wrong.
(✨ Energetically, I believe that sometimes sticky legal situations happen because you’re about to uplevel and you’re getting a heads up that you need to close some gaps. Interesting way to look at it, eh? But back to your legal steps…)
So what exactly should you do?
1. Use contracts and legal terms.
🪙 Contracts are the gold standard. They protect you – and your clients – on the front end.
Contracts are the best starting point to limit your liability because you both sign a contract and agree to terms BEFORE something goes wrong.
Nothing beats a client’s signature on the dotted line.
Be sure your contracts have sections like “Disclaimers,” “Limitation of Liability,” and “Release of Claims”. This language says things like you’re not liable for your client’s actions or decisions after taking your course/program. Or you’re not giving medical advice. Or if they try to sue you, the most money they can get from you is the payment they’ve made to date.
That’s why you want to use contracts and other legal terms like a:
- Client Agreement – for your 1-on-1 clients
- Website Disclaimer – for your website to disclaim your liability
- Website Terms & Conditions – for your website to protect your content
- Independent Contractor Agreement – for your team members
- Overnight Retreat Agreement – for your client retreats
❓Are you using contracts in your business? Do they have Disclaimer, Limitation of Liability and Release of Claims sections?
Pause now for 5 minutes and look at your legal documents. If you have questions about whether your contracts have the right language, hit reply. We can help.
If you’re good to go with your contracts/legal terms, EXCELLENT work.
If you need to tighten things up – or even get started – with contracts/legal terms, now it’s on your radar. Don’t put it off.
(⚖️ In case you’re wondering, all of my DIY Legal Templates include disclaimers and legal language to limit your liability. If you need updated/new contracts like those mentioned above, click right here.)
2. Get professional liability insurance.
Insurance is one of the best ways to protect you on the back end AFTER someone comes after you.
Professional liability insurance is not legally required for most coaches or online entrepreneurs (like medical malpractice insurance is for licensed practitioners like doctors and nurses.)
But, it’s a really good idea to have it.
Um, yes. And it’s really worth the cost. It can cover you if you make a mistake or something goes wrong while you’re working in the scope of your profession.
🍏 For example, if you’re a health coach, it can cover you when working with your clients (provided you’re not violating others’ scopes of practice, like dietetics or medicine).
🏋️ If you’re a fitness instructor, it can cover you while you’re training your clients in person or through online classes.
It can give you the option to file a claim and receive reimbursement. (Each insurance policy is different though, so read the fine print and talk with an insurance agent so you know what’s covered and what’s not.)
🚗 Just like your car insurance helps you when someone crunches your fender in the grocery store parking lot, professional liability insurance gives you peace of mind if something goes wrong while you’re working on Zoom with your clients.
❓Do you have professional liability insurance? Do you know what your policy covers – and what it doesn’t?
If you do, GOOD JOB!
⚖️ If not, and you need insurance, I highly recommend Alternative Balance – a company that offers liability insurance & business tools to health coaches/nutrition consultants, life coaches, yoga teachers, fitness instructors, Ayurvedic practitioners, beauty consultants, body workers and more. I know the owner personally and it’s a great company!
3. Cover your assets with an LLC or S-Corp.
You can protect yourself on the BACK end with a corporate entity like an LLC or S-Corp.
“Going pro” and stepping up from being a sole proprietor to forming an LLC or S-Corp helps limit your liability by keeping your personal and business finances legally separated if someone sues you.
Generally speaking, if you’re sued in your business, no one can come after your personal assets (like your house, checking account, and IRA).
And if someone sues you in your personal life, they can’t walk away with your business assets (like your business checking account).
I like to say that having an LLC or S-Corp is one of the best ways to protect your loot.
❓Do you have an LLC or S-Corp? If not, is it time for you to create one?
⚖️ If you’re not sure if you should create an LLC or S-Corp right now, check out this easy DIY Legal Master Class here to find out.
As you can see, while all 3 of these legal steps are different, each is important and protects you at different times.
Contracts are a proactive way to get legally covered because you are laying out the terms BEFORE you begin your work together.
Insurance and LLCs / S-Corps are reactive ways to get legally covered because your legal protection doesn’t kick in until someone comes AFTER you.
Have questions about these proactive and reactive ways to cover your buns? Book a free 20-Minute Legal Chat here and we’ll point you in the right direction.
Here’s to protecting yourself on both the front AND the back ends!
In full disclosure (like a good lawyer!), I need to tell you that if you enroll with Alternative Balance, I’ll earn a referral fee if you choose to sign up through my affiliate link. Know that I wouldn’t recommend Alternative Balance if I didn’t fully believe in their work. Promise!