Legal Concerns for Micro Business Owners: Protect Your Side Hustle

You start fixing bikes for a small fee or selling personalized buttons online or doing accounting
for local companies. Even if it’s just a side hustle, you’ve got yourself a business. These small-
scale ventures fall under “micro business” umbrella.

Typically, the micro business is not the owner’s main source of income. It usually requires only a
small amount of startup capital so you can jump in right away. And, it can be operated with
minimal resources making it “lean and mean” relative to a traditional small business. Micro
businesses span a vast array of industries, including crafts, food services, consulting, freelance
work, and online retail.

Even if it’s the smallest of businesses, there are a number of legal considerations you should be
aware of as you grow this company you’ve launched.

1. Business Structure: The legal structure you choose for your micro business (sole
proprietorship, limited liability company, corporation, etc.) will impact your liability,
taxation, and regulatory obligations. Make sure to understand the implications of each
structure or for going without.

2. Tax Obligations: Your tax obligations will vary based on the nature of your micro
business and its legal structure. This could include income tax, sales tax, and potentially
others.

3. Insurance: Depending on the field in which your micro business operates, you may need
different types of insurance, such as liability insurance, property insurance, or
professional indemnity insurance. Some forms of insurance may be required by law.
Insurance from your “main job” likely will not support your micro business activities.

4. Contracts and Agreements: Legally document your business relationships such as
vendor agreements to customer contracts to protect both parties.

5. Privacy Laws: If your micro business involves collecting or storing customer
information, especially online, you need to be aware of privacy laws and regulations,
provide appropriate security for personal information and guard against data breaches.

6. Intellectual Property Rights: If your micro business involves a unique product, service,
or brand name, consider securing intellectual property rights (e.g., trademarks,
copyrights, patents) to protect your business assets from misuse or theft.

7. Employment Laws: If you plan to have employees or independent contractors, even if
only one or two, then you’ll need to be aware of employment laws, which may include
wage and hour laws, anti-discrimination laws, worker classification, and others.

Remember, this is a broad overview, and the exact considerations will vary based on the specific
nature of your micro business and the jurisdiction in which it operates.