Starting an Internet Business in New York City – The Legal Issues

Starting a new Internet business in New York City involves most of the legal issues that all new businesses have to deal with, plus several additional legal matters unique to Internet businesses. Success with a new Internet business ultimately depends on more than a talented entrepreneur, a good business model, an achievable business plan, strong managerial and technical skills, and hard work. It also requires an appropriate legal framework and footing. Although the entrepreneur can handle some of the legalities alone, the assistance of an experienced Internet business lawyer on several of the most important matters can be critical and save the new Internet business many times more than the lawyer fees involved. 

We asked Ronald Goldbrenner, a highly regarded NYC attorney based in Manhattan and Brooklyn, who often counsels founders setting up Internet businesses in New York City and elsewhere, to highlight the most important of the many corporate, employment, contract, licensing, trademark, copyright, tax and other important legal matters anyone starting a new Internet business should consider, and how an Internet business lawyer can help cost-effectively. 

1. Corporate Structure:

You almost certainly should operate your new Internet business through a corporation or LLC (a limited liability company) to help protect yourself from personal liability. Unlike a business serving a local community, the world-wide scope of an Internet business makes it subject to potential litigation in courts far away, and you don’t want to face personal liability world-wide.  Tax considerations will determine your choice of a subchapter S corporation, a subchapter C, or an LLC.  Selecting the optimal corporate form may also impact your start-up Internet business’ ability to borrow money, seek investors, provide stock options and benefits and have major tax consequences when it’s time to sell. An Internet business lawyer can help you make the choices that are best for your particular situation and pocketbook.

2.  Domain Name:

Even if you have a great domain name, before you launch the new Internet business you’ll want to be confident you can use it without infringing someone else’s trademark rights. Otherwise, after you successfully build goodwill and traffic, someone can stop you cold. You’ll also want to be sure you’d be able to stop someone else from a using very similar name or even a “dot net” version of your name. Whether you can get meaningful Federal or international trademark protection often depends on how descriptive or fanciful the domain name of your new Internet business is, and similar names now in use by others. An Internet business lawyer will help make sure you’re as protected as you want to be.

3. Agreements with Free Lancers, Artists, Designers, and Content Writers:

The contract forms presented to a new Internet business by website developers, programmers, hosting companies and others often contain onerous provisions giving the free lancer or contractor various rights new Internet entrepreneurs are not aware of, including ownership or other equity interests, or an obligation to pay ongoing fees. While a website designer will tell you “Don’t worry, you’ll have the right to use it,” a “right to use” is very different from complete “ownership.” For example, the person or firm creating the website, photo, text or program usually will own the copyright UNLESS there is an explicit “work made for hire” agreement in place. Confidentiality agreements often can hurt you as well as help – it depends on the content. Many Internet businesses  have learned the hard way that the agreements they innocently signed, including confidentiality agreements, have gotten them into trouble. Having an Internet business lawyer quickly review meaningful agreements usually pays for itelf many times over.

4.  Terms of Use, Privacy Policies and Other Online Agreements:

A new Internet business needs to have an effective, appropriate Privacy Policy and Terms of Use agreement. Merely copying one from another website does not do it. You have to customize the terms to your site’s activities. Terms of Use agreements are especially important if you are operating a forum as part of your website, charging consumers for using a web application, or selling merchandise. An Internet business lawyer can save you time and heartache.

5.  Compliance with Federal, State and Local Laws and Licensing Requirements:

While it may be easy to “just do it” and register a domain name, build a website and start doing business on the Internet, there often are Federal, state and local laws, rules and ordinances you must comply with, depending on the nature, scope and staffing of your new Internet business. Failure to comply can cost you dearly and may even doom your Internet business. When starting a new Internet business in New York City, you’ll want an Internet business lawyer to point out the critical New York City, New York State and Federal rules so you can comply and run your business without becoming mired in paperwork. 

Click here, to contact Ron Goldbrenner, an experienced New York City Internet Business Lawyer.