10 Legal Myths Keeping You From Being Legally Protected

Legal Myths Keeping You From Being Legally Legit

Are you taking your legal advice from strangers in Facebook groups or Google articles? If so, you’re going to want to read this…

When I first started my biz, I used to open up 5 slots for a Legal Checkup call and connect with women all over the U.S. who were ready to get legally protected, but didn’t know where to start.

They shared with me how much time they’ve wasted in Facebook groups, Google lawyer-ing, and spinning their wheels trying to figure out what the heck they needed to do to legally protect their business.

Sound familiar?

I’m sure you’d much rather spend your time working on revenue-generating tasks in your business — like working with clients, promoting your business on social, and making an impact.

Sounds better than wasting hours Googling, copying, pasting, and still not knowing whether you’re protected, right?

But here’s what the real problem is: all of those tips/advice/Facebook group non-lawyer lawyers are usually wrong.

And the direction they’re giving you is dangerous — because the consequences are real. And you’re not going to be able to say, “But some girl in a Facebook group told me it was OK!”

As my Dad said (ALL THE TIME), “if someone jumped off a bridge, would you too?”

I see it ALL! Trust me, I’m in those same groups. And I cringe every time I see a non-lawyer handing out misinformation and someone replying “thanks! I’ll try that!”

You see, these myths that are being passed around like bad apples online are keeping you stuck in a loop.

Legal Myths

You’re so frustrated and confused about legal that you want to believe whatever someone tells you — but there’s still that tiny seed of doubt planted deep inside your brilliant brain.

Luckily, now that we’re friends, you know who you can come to to get legal info that actually applies to you and your kind of business.

10 myths that are keeping you from being legally protected in your business.

Let’s get started!

1 // If someone signs a contract, I can do whatever I want.

I was on a Legal Checkup call* with someone who wanted to get an independent contractor contract in place so she could hire contractors to help her in her wellness business.

Although she was going to have them sign contracts saying otherwise, she wanted to treat those contractors like employees (there’s a huge legal difference!).

Legal Myth: If someone signs a contract, I can do whatever I want.

This is one of the biggest myths out there about legal and your business.

You cannot, under any circumstances, do one thing but have someone sign something saying something different.

All that will matter in the end is that you did whatever you did. Not that you had someone sign something saying otherwise.

I also hear this one a lot when it comes to scope of practice. “I’ll have them sign a disclaimer or client contract, but then I’ll go outside my scope as a health coach with them.” (You don’t put it like that, but that’s essentially what you’re saying.)

Nope, doesn’t work that way. If you go outside your scope, cause damage, or harm someone – it won’t matter 1 bit that you had them sign something saying you don’t do that kind of work. The proof is in the pudding.

2 // I should wait to get legally protected until I make more money.

Think you’re supposed to wait to get legally protected until you make more money?

Nope. There’s no rhyme or reason to waiting because you’re legally exposed from the moment you say “Go!” and start advertising your business.

I registered my business the day I bought my domain name. There was no reason not to — I wanted to be protected from Day 1 because I was serious about my business and wanted to work with clients ASAP.

Legal Myth: “I have an LLC, so I don’t need a contract.“

3 // I have an LLC, so I don’t need a contract.

That’s great that you have an LLC setup! But just having an LLC isn’t enough because you need written and signed proof of your client relationship.

For example, you’d want to be able to prove that you properly advised the client about what was included in your services, what wasn’t, and what options were available to her if she wasn’t happy.

All the LLC does is protect you personally from being liable if something happens. But what kind of proof will you have to defend yourself? That’s exactly what contracts solve.

Sidebar: contracts are so important for so many more reasons, including being able to actually set healthy client boundaries, get paid, and maintain your relationship with clients.

4 // I have business insurance, so I don’t need an LLC.

Business insurance is what (theoretically) picks up the tab if you’re sued. BUT – there are a few things you must know.

Business insurance only ‘picks up the tab’ for things that are covered by your business insurance policy. Not everything you do in your business is covered by your policy. For example, most policies don’t cover intellectual property disputes or cyber attacks.

If your business insurance either doesn’t pick up the tab (because they claim it’s not covered by your policy) OR you’re sued for over the amount of your policy limits, without an LLC, you’d personally be left holding the bag.

5 // I only need to worry about my state’s scope of practice laws.

That’s not the approach I teach inside my Ultimate Bundle® program. The laws around this haven’t been completely fleshed out. But from my experience as a corporate attorney back in the day, I think this is how it’s going to go down:

It not only matters what your scope of practice is where you live/work, but also where your client is located.

The idea is that although 1 thing might be OK in your state, it might not be OK in the client’s state. And you’re ‘reaching in’ to that state by working with the client. Therefore, you could technically be accused of practicing outside the scope of that state’s laws. This kind of thing happens to doctors, lawyers, etc. all the time — so I’m thinking coaches/creatives won’t be immune.

6 // I have a d/b/a, so I’m protected.

If you only have a d/b/a, then you’re probably a sole proprietor (SP), right? In some states, you’re not required to register as a SP and can simply register a d/b/a instead.

That’s fine – but just know that both being a SP or having a d/b/a offers you 0% personal liability protection. So if the business is sued, owes money, or is threatened in any way, you’re personally responsible for its debts and liabilities (whereas an LLC would insulate you).

A d/b/a (doing business as), or fictitious name, is a way to help customers identify a business name they see in day-to-day life. For example, Nordstrom (the best department store ever) is a d/b/a name for Nordstrom, Inc., their registered entity name.

So you can get a d/b/a if you have an LLC, partnership, etc. if you operate ‘in commerce’ as a different name than what your legal entity name is. It’s typically a pretty painless and affordable process in your state.

7 // I put together my own contract or got it from a friend. That protects me, right?

The truth is, your borrowed, DIY’d, or copy + pasted freebie contract probably doesn’t protect you at all.

If you’re not a lawyer, you don’t know what to put where or how to customize it to you and what you do. That’s totally OK – this isn’t your area of expertise. It’s not supposed to be.

The freebie contracts you see online are free for a reason: they’re terrible. They don’t have the paragraphs you MUST have to legally protect yourself. They’re riddled with errors and continued mistakes from people passing them along.

And they have nothing specifically to you and what you do. Which makes it not really apply to what you do or cover you at all.

Beware of coaches and programs that will give you free contracts

Beware of coaches and programs that will give you free contracts. Unless they’re a lawyer, they might be passing something along that’s not enough to protect you. I know they have good intentions – but the ones I’ve seen are terrible.

8// I can’t get in trouble for free content

Unfortunately, we can be held liable for things we say or do for free on the internet. Anything you say or do that people can implement in their life, business, finances, relationships – whatever it is you help people with – you can be held liable for.

Even if you frame your content clearly as your own opinion, you can be sued if someone claims that what you said, did or taught them caused them harm. . If a reader or follower experiences some sort of bad result and you don’t have the proper legal pieces in place, they can come back and blame you.

Please don’t make the mistake of assuming free content doesn’t expose you to legal liability just because you haven’t received payment for it.  

It does.

9// I’m so small, I don’t need to have a business bank account.

First of all, as your business grows, you’re going to have so many financial transactions that, eventually, you won’t be able to easily keep track of everything. Not to mention, you’ll be too busy to spend your time doing so!

But there’s a more important legal reason why you have to keep them separate. If you have an LLC, for example, it’s actually a legal requirement that you keep separate, organized, detailed financial records AND that you treat your business money like business money. Which means no commingling your Chipotle funds along with that payment you just got for your next coaching client

Make your life easier and keep business finances separate from your personal ones from the get-go. This doesn’t need to be complicated or fancy – you just need to have 2 separate accounts and keep bookkeeping records for your expenses and income. You can easily get started by opening a business bank account and using professional bookkeeping software with something simple like QuickBooks 


So, love — those are 10 of the myths I hear the most often that are holding you back from being legally protected.

If you’re ready to quit wasting time being a Google lawyer and instead want to feel legally protected so you can get back to your business — I’ll invite you to learn more about my a la carte DIY legal templates or Ultimate Bundle® program, which gives you 10 DIY legal templates and 35+ videos to build a legal fortress around your brand.

Any Qs? Send me a message right here. I’ll get back to you ASAP.

**Free Legal Checkup Calls are no longer active as of 2020

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