Legal Requirements and Considerations When Selling Online Courses

Navigating the world of legal requirements as an entrepreneur can be quite challenging and sometimes discouraging. However, anything you are unaware of looks “scar,” we are here to tell you that there is nothing you should be afraid of. 

From business registration and tax compliance to intellectual property and consumer protection, understanding the legal landscape is crucial to running an online education business. This article will unveil everything you need to know about legal requirements and considerations when selling online courses. So, if you are ready, let’s dive into it. 

Legal requirments for selling online courses 

To make this article easier to digest, I’ve divided it into two sections. This section will cover legal requirements for selling online courses, while the next section will shed light on considerations. So, let’s get into it. 

Business registration and licensing 

Registering your business is the number one legal requirement you shall not skip for effective and legal monetization opportunities across States. Business registration and licensing refer to the legal process of establishing your business. It ensures compliance with federal, state, and local laws. 

Registering and, if required, licensing your business legitimizes it further, helping you solve any legal issues. It also allows you to open business bank accounts and legally receive payments. 

To register a business in the United States, do the following: 

• Choose a business structure (sole proprietorship, LLC, or corporation). Most course creators proceed with the sole proprietorship option. 
• Register your brand’s name and file a DBA if needed. 
• If required, Apply for EIN to obtain an Employer Identification Number from the IRS. 
• Register with state agencies. It depends on the state in which you are based. You may or may not be required to get additional licenses. 
• Obtain a business license if the local requirements for operating an online business obligate you. 
• Set up a business bank account. 

Sales tax compliance 

Income from online courses is taxable income. Thus, sales tax compliance is crucial for risk-free and legal business operations. 

Sales tax compliance refers to collecting, reporting, and remitting sales tax on online course sales when required by law. Different states have different rules regarding digital products. Managing taxable income efficiently involves knowing how to create a pay stub for clear financial tracking.

Complying with the tax requirements is crucial as it helps prevent legal penalties and fines. To make sure you comply with local sales tax requirements, you need to:

• Determine nexus by checking if your business has a tax obligation based on your state. 
• Check state laws to understand whether or not the state you are based in taxes digital products. 
• Register for a sales tax permit.  Apply with the state’s Department of Revenue.
• File and remit taxes. Submit collected sales tax according to state deadlines.

To stay safe, make sure to check laws regularly for updates. 

Copyright and intellectual property laws 

Copyright laws protect original content (from videos to slides). What or who do copyright laws protect the content? From unauthorized use. Intellectual property laws are crucial, and they also include trademarks and patents. 

Think about it: how would you feel if someone used the content you spent an hour creating without your permission? Moreover, they did not reference it. If the above was not enough, you will find out they have monetized it without putting effort into the creation process. Not good, right? 

That’s why it is crucial to comply with copyright law and not steal materials without permission or references. 

Register your content for copyright protection. You can file for copyright protection through the U.S. Copyright Office. You can register trademarks with the USPTO if you have unique branding elements.

If you plan or use third-party content, then you should also obtain the necessary permissions or use royalty-free resources. 

As a general rule of thumb, you should also promptly monitor your content to identify infringement. You can use tools like Google Alerts or DMCA takedown notices to facilitate this process if your content is stolen.

Terms of service and privacy policy 

The Terms of Service (ToS) is a legal agreement that outlines the rules and conditions for using your course. A privacy policy explains how you collect, store, and use students’ data.

It’s essential to offer users clear terms of service & privacy policies. Why? First, it protects your business by setting clear rules for the users. It also helps to prevent disputes over refunds, content ownership, and course access. Finally, it ensures compliance with data protection laws like GDPR and CCPA. 

You can start the creation of terms of service and privacy policies by: 

• Draft terms of services covering content usage rights, payment terms, and disclaimers. 
• Create a privacy policy explaining what data is and why it is being collected (e.g., emails, phone numbers, etc). Also, specify how the data is being stored. 
• Post policies on your website. Make them easily accessible before users sign up or make a purchase.
• Require user agreement. Have users check a box agreeing to the terms before purchasing.

Consumer protection 

Consumer protection laws are crucial to ensure buyers receive what they paid for and have legal rights in case any issues arise. As a creator/business owner, you must adhere to consumer protection laws and regulations. 

For instance, you must avoid deceptive marketing practices to ensure FTC compliance. Such practices lead to misleading beliefs and claims. 

Data protection and online security 

Data protection laws regulate ways in which any business can collect, store, and use customer data. It is especially important to comply with data protection requirements, considering the recent growth in cyber threats and attacks. 

Consumer data protection prevents breaches that can lead to legal liability. Also, it helps you build trust with your students by safeguarding their personal and payment information. 

To ensure high levels of data protection and comply with legal requirements, you can:

• Limit data collection and only collect necessary user information. 
• Follow CCPA guidelines if you are based in California or your audience is in California. 
• Incorporate secure data storage practices and use encrypted databases. You can add two-factor authentication for admin accounts as an additional security measure. 
• Prepare an effective data breach response plan. The plan outlines all necessary steps to handle the breach, including notifying users and mitigating damage. 

Overall, to ensure high levels of security, the measures should be regularly updated. 

Legal considerations when selling online courses 

As far as the requirements are clear, let’s move on to the considerations section of today’s guide. So, what should you consider when selling online courses to protect your business and clients? Let’s dig deeper. 

Intellectual property protection

The number one thing you should take good care of is intellectual property protection. Every new resource, whether a free e-book or paid content you put out there, is the result of you investing time and effort. Thus, it must be protected from unauthorized use. 

Using third-party resources 

Many course creators incorporate third-party materials like images, videos, or research papers. This helps to make the course more well-rounded. However, using content with improper permission or reference can lead to copyright infringement claims. 

To avoid infringement, check usage rights before using third-party content. If necessary, purchase stock images or music for the course's process. 

Developing your content whenever possible is one of the safest methods to avoid infringement. If you want additional reading options, simply provide links and references. 

Are references necessary 

Referencing credible sources enhances trust and credibility when presenting research, case studies, or factual claims in your course. Failing to cite sources may lead to accusations of misinformation, plagiarism, or academic dishonesty. 

Refund Policy 

It is essential to consider your refund policies to avoid legal disputes later on. First, decide whether or not you permit refunds. Then, you can define the terms and conditions under which a refund is acceptable. 

To create a good refund policy, start by: 

• Set clear refund terms 
• Set refund window. Many creators stick to a 14 to 30-day window. 
• Specific eligibility requirements (e.g., how much % will be refunded, or in which cases students are eligible for a refund)
• If applicable, include a no-refund clause to avoid further disputes. 

False advertising risks 

Avoid false advertising and misleading claims about your course. These can lead to trouble under the FTC guidelines. For instance, if you have misleading claims in your ads and users complain, you may be fined. Moreover, your brand’s reputation will be damaged. 

Scale your online course business with Uteach 

If you are looking for a quality and secure solution for selling your courses online, then you are in the right place. Choosing a trusted provider is crucial for adhering to privacy and data protection policies, and Uteach is here to help. 

Uteach is an all-in-one software solution for coaches, consultants, and course creators. Our platform offers features ranging from white-labeling and branding options to website builder and customization functionality. Schedule a free demo with our team to learn more about our offerings and how we can help you scale.