What You Need to Know About the Legal Side of Running a Business with Bobby Klinck

In this episode of Profits + Prosecco Podcast, I am so excited to welcome Bobby Klinck as a special guest! Bobby is a Harvard Law Grad turned online entrepreneur—but he’s NOT your typical lawyer. He doesn't do suits, he hates legalese more than you do, and tends to make lame pop-culture references and dad jokes. I found Bobby through a webinar being advertised a couple of years ago. Since then, I’ve been following him and using his templates. Today, we will be diving into everything you need to know when it comes to the legal side of running a business! 

But before we dive right in, welcome to the Profits + Prosecco Podcast! I’m your host, Katie Ferro, CPA, reformed rule follower, creator of Booked Out Bookkeeper, mom to 3 little ones, and Kajabi enthusiast.

This podcast is for entrepreneurs who desire to change their life through their profitable business, and for bookkeepers and accountants who want to escape the 9-5 and start a simple scalable bookkeeping business like I did. 

Bookkeeping increases profits and profits change lives. So pop some bubbles and let me show you how! 

In this episode, Bobby and I will be talking all about what you need to know when it comes to the legal side of running a business. And for even more juicy details, listen to ALL of episode 5 of the Profits + Prosecco Podcast on your fave streaming platform.

Why you should treat your business whether it’s online or in-person as a business, not a hobby.

Bobby shares that there have been too many people who have been sold on this notion that you can build an online business without spending any money. This is far from the truth, you will have to spend money even if it’s an online business. Bobby says if you feel you aren’t ready to do that, you won’t build a business. You may build a hobby, but not a business. I couldn’t agree more with his point here, since I work with clients at all different levels. Oftentimes, I have clients ask me about industry standards for profit margins. I’ve seen that my most profitable clients are the ones with lower profit margins. They make more money, but they spend more money than clients who have more of it. I can’t say that one is right and one is wrong. Usually, the one with a lower profit margin has room for job expansion and job building. 

You may be able to make money without spending it, but you won’t grow an actual business. If we think about brick and mortar businesses too, we know that there’s a shop, we know there are certain expenses. This concept has to be transferred to online businesses as well. Bobby says that he’ll sometimes come across people who don’t want to give affiliate revenue out for people promoting their product. Our digital products are essentially no cost, there’s no real cost of good sold. Bobby points out that you can either spend money or time, but you can’t do one without the other. If we truly think about it, money is replaceable, whereas time is not.

Bobby shares one legal obligation for running an online business.

When it comes to the legal side of running a business, Bobby wants everyone to know that for most online businesses, there is only one thing you legally have to do. That one thing is to have a privacy policy. If you do collect any information on your website from consumers, you’re required to have a privacy policy. If you have a freebie you’re offering where someone signs up saying, “We respect your privacy, we will not share your information with anyone”, don’t have that right on your opt-in page. You’re sharing it with your email provider, so you are sharing the information. You aren’t selling or misusing it but you are still using the information to your provider or those who help deliver your products. This is mainly due to the GDPR, General Data Protection Regulation. The GDPR is a European Union regulation that came into existence in 2016 and became effective as of May 2018. 

The GDPR shares limits of what you can do with people’s data, and we must comply with this. One of those requirements is a privacy policy. Another legal obligation you should have is a disclaimer, which is disclaiming what you're doing with your services and information. It’s on whoever is consuming the information to decide what to do with it. Although it’s not technically legally required, Bobby highly recommends having a disclaimer set up. Then you have terms of use, this is the basic agreement between you and your website visitors. This will include things like what your background is and what your standard refund policy is. It will also have limits on the use of the material that they download, you can also indicate that you own this copyright of the material.

Understanding the cash flow in your business is critical to protect yourself from any unexpected expenses or costs.

Understanding cash flow in your business is critical. You have to know the current state as well as what’s happening in the coming future. This is understanding the money coming in and the money coming out. Sometimes people are afraid to look at the numbers but money and cash flow is the lifeblood of your business, Bobby says. If you don’t know what’s happening with your money, you have got problems. By preparing and knowing what costs may be coming, you can segregate enough money off. Unfortunately, a lot of people find themselves in the position where unexpected costs of expenses come and they’re out of money. I know that especially after Covid-19, holding onto some of that cash based on your refund policy is important. I have clients who will receive payment as well for their work and have unexpected disputes occur. 

For example, a client of mine who is a graphic designer fulfilled a project and got paid. Last December, her client found herself cash poor and filed a dispute with Stripe to get money back. Ultimately, my client did win the dispute but in the meantime, Stripe was attempting to pull funds from her bank account. This can be such a defeating and stressful experience, especially if you’ve done your job and fulfilled the terms like my client did. My client ended up short-term dealing with bank fees, overdraft fees, etc... In my opinion, those bank fees can always be avoided if you constantly have a reserve in your account. The reality is, you should always be aware of the risk when you take payment from Stripe or Paypal. The risk is worth it, due to the ease of getting paid. However, the possibility of disputes remains there, so I highly encourage you to always keep a minimum balance in your checking account. Bobby says that his goal is to always have a 6-month reserve so you can run your business without revenue if you had to.

What You Need to Know About the Legal Side of Running a Business with Bobby Klinck: The Bottomline

I hope hearing all about Bobby’s incredible wisdom was helpful for you when it comes to the legal side of running a business. Remember, you can set yourself up for success or you can be on uncertain grounds with your business with a possibility of getting in trouble. That experience is very unpleasant and entirely avoidable. So take your business seriously! Make decisions from a CEO standpoint. 

Check out Bobby’s free Online Genius Academy and his template library here!

Don’t forget to tune into episode 5 of the Profits + Prosecco Podcast. Thank you so much for listening to Profits + Prosecco Podcast. I know this episode has helped you see how profitable businesses change lives. If you enjoyed the episode, please take a second to rate and review. Each review helps us reach and inspire more entrepreneurs and bookkeepers just like you. 

Don’t forget to take a screenshot, share it in your Instagram stories, and tag me at @orderlyaccountingbykatie. Cheers to your inevitable success and I’ll see you in the next episode! 

Connect with Katie Ferro

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