Starting a business is exciting — but it’s also filled with decisions that can feel overwhelming (and maybe even a little intimidating). If you’ve ever felt tempted to “deal with the legal stuff later,” I totally get it.

But here’s the truth: you can’t afford to skip the legal foundations.

In this post, I’m joined by Sam Vander Wielen, a lawyer-turned-entrepreneur and bestselling author of ‘When I Start My Business, I’ll Be Happy?’. Sam has helped thousands of coaches, creatives, and course creators legally protect their businesses without the stress — and she’s here to share exactly how you can do the same.

Whether you're just getting started or already running your business, these insights can save you time, money, and future headaches. Let’s dive in.

The #1 Legal Mistake New Business Owners Make

According to Sam, the most common (and costly) mistake? Waiting too long to get legal protection.

Many entrepreneurs think they don’t need legal coverage yet — especially if they’ve only got a few clients or aren’t turning a profit.

But the law doesn’t care how big or small your business is. Whether you’re working with one client or one thousand, you need legal protection from day one.

The 3 Legal Essentials Every Business Needs

Thankfully, you don’t need a law degree (or a huge budget) to legally protect your business. Sam broke it down into three simple components:

1. Register Your Business

Registering as an LLC (Limited Liability Company) is a common first step for online businesses because it separates your personal finances from your business finances.

But here’s something I didn’t know until chatting with Sam: LLC protection only works if you actually act like an LLC. That means:

Signing contracts in your business’s name (not your own)
Keeping business and personal finances separate
Using your LLC’s name consistently online and offline

Also, be aware: some states don’t fully recognize single-member LLCs. So it’s worth doing a little research (or checking with an attorney) to make sure you’re fully covered where you live.

💡 Pro Tip: You can usually register your LLC online through your state’s business website. Some people choose to use an attorney, especially when forming a partnership, but most solopreneurs can do it themselves.

2. Have the Right Contracts in Place

Think of contracts like your business’s boundaries. They protect you, your client, and your relationship.

Depending on what you sell, this could include:

Client agreements (for services)
Terms of use (for courses or digital products)
Shop policies (for physical products)

One thing Sam emphasized: Don’t DIY your contracts using free templates or AI tools like ChatGPT. Not only do they often leave out critical sections (like disclaimers or venue clauses), they can give you a false sense of security — which is even riskier.

Sam recommends using professionally created legal templates (like the ones she sells), or working with an attorney if you have the budget. The key is to feel confident that your contract actually protects you.

3. Get Business Insurance

This one is often overlooked — but it’s essential.

The right business insurance can protect you in case of:

Client disputes
Accidental damages
Legal claims (even from free content!)

There are two main types of insurance most online business owners should consider:

Professional Liability Insurance (aka Errors & Omissions or E&O) — covers issues with your services or products
General Commercial Liability Insurance — covers bodily injury or property damage

You can usually get quotes through a business insurance broker, who will shop around for you to find the best fit and price. Just make sure you’re clear about what you do and how you sell, so you get the right coverage.

What If You Sell Digital or Physical Products?

If you sell:

Courses or digital products → Use a well-drafted terms of use at checkout
Physical products → Include “shop policies” clearly stating return policies, shipping info, and disclaimers

These terms should be agreed to at checkout, not just hidden in your footer. That’s what protects you from chargebacks and disputes.

A Word of Warning: Contracts Only Work If You Use Them

Sam shared a great analogy: If you let people break little pieces of your contract, it’s like parenting a toddler — they’ll keep pushing the boundaries.

For example, if you have a no-refunds policy, but make an exception “just this once,” you’ve essentially weakened the legal protection your contract provides.

Contracts only work if you stand behind them. That doesn’t make you mean — it makes you professional.

What About Going Into Business with a Partner?

Thinking of teaming up with a friend or family member? Proceed with caution.

Sam has seen countless “business divorces,” and says:

“Never go 50/50. That’s a terrible idea.”

Why? Because if you disagree, there’s no tie-breaker. Instead, structure the ownership as 51/49 or define a decision-making process in your operating agreement.

And please — don’t skip the legal paperwork just because you’re friends. Protect your relationship by getting everything in writing upfront.

Is ChatGPT Good for Writing Contracts?

Short answer? Nope.

Sam actually tested ChatGPT by prompting it to write a coaching contract — and the results were, well, scary. It missed entire sections that are legally essential, like disclaimers and indemnification clauses.

Even worse, if you don’t know what’s supposed to be in a contract, you won’t know what’s missing.

Sure, AI tools can be helpful for brainstorming or editing — but not for creating legally binding documents from scratch.

👉🏼 Check out Sam’s Legal Foundations Pack for a more secure way to set up your legal foundations.

Bonus Tip: Keep Your Contracts Updated

Your business evolves — and so should your contracts.

Sam recommends reviewing them quarterly and updating them anytime:

A client pushes a boundary you didn’t think of
New tools or tech (like AI) change how your content is used
Your offer, process, or delivery changes

Your contracts are living documents, and updating them is part of keeping your business strong and protected.

A Simpler, Safer Way to Get Legally Legit

The best part? It doesn’t have to be complicated.

Sam’s entire mission is to make legal protection feel doable, even if you’re just getting started.

She offers a free Legal Workshop that walks you through the basics (highly recommend if you're feeling overwhelmed). And if you’re ready to get your contracts in place fast, check out her Legal Foundations Pack — it’s an affiliate link, so you’ll be supporting my work when you purchase through it. 🙌

Bottom Line

Getting legally legit might not be the most exciting part of entrepreneurship, but it’s one of the smartest moves you can make.

It gives you peace of mind, protects your hard work, and lets you show up confidently in your business — knowing your boundaries are crystal clear.

So if you’ve been putting off the legal stuff, now is the time. Your future self (and your bank account) will thank you.

You’ve got this. 💪

➡️ Watch Sam’s free legal workshop here
🛡️ Or grab the Legal Foundations Pack now

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The #1 Legal Mistake New Business Owners Make