Friday, May 27, 2011

What do I need to cover myself legally?

Question submitted by Leanne: Since i could not afford at the time to get the legal package I wante dto know how do I go about getting the name of the business I want here trademarked and I believe I may also need a reseller license but I am not sure if FL offers that.  what is the best route for me to go to cover myself inexpensively concerning getting legal information I will need? People are so sue happy and since we are reselling products online there are several things I may need to cover myself.

Answer: In general, if your business name has your last name, then its not required to be registered. Your website can be called something completely different. You should brand your business name with the website or you might need to register a Doing Business As Name. I'm no expert on this so you should probably consult

Since this is a retail business, you will likely need a Sales and Use Tax License. It is free, and you can register online at You may also need a Dunn & Bradstreet (D&B) number from You may also want to consider getting an EIN number from even if you don't incorporate and don't have employees. Having the EIN will keep you from having to list your SSN everytime someone asks for your business tax ID.

While it is suggested that you incorporate your business to separate you business assets from your personal assets, it certainly is not required. In my experience, dropshippers don't care as long as you appear professional. They usually ask for the sales and use tax (reseller) license and sometimes the D&B number. They may even ask for references. In the case of the references, you may need to revisit that supplier after you've found other suppliers.

This is a very sue happy country so there is always a risk of being sued by somebody for something. In the case of lawsuits, being incorporated, or at least a Limited Liability Company, is best. Generally, when you sell someone else's product, the customer goes after the manufacturer, not the seller. If I get sick from eating a bag of Lays potato chips that I bought from Wal-Mart, I'm not going to sue Wal-Mart, I'm going to sue Lays. If you look at it like that, then the risk of being sued is probably minimal. What I can say is that there is a good time to incorporate and a bad time. There can be tax benefits to waiting. On the other hand, how you incorporate is important as well. There can be tax benefits there too. Here is a nice table comparison:

If you choose not to incorporate, make sure that your website contains a disclaimer about your company not being liable for misuse of the products and show the brand name of your products as much as you can (makes it easier for the customer to know who the manufacturer is).

Remember that I'm no lawyer or business consultant. These are just practices that I have for my own business.

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