Dancing at My Desk

Blissdom 2010: A Blogger’s Guide to Legal, Accounting & FTC Guidelines

Presented by Susan Getgood (Marketing Roadmaps; @sgetgood), Liza Barry-Kessler (Privacy Counsel, LLC; @lizawashere) and Kristen Berman (Intuit Quickbooks Pro).

Starting off with Accounting Best Practices is Kristen from Quickbooks. Her mission is to help the small business and their bottom line. She is going to be speaking from her experience not as an accountant (because she isn’t one, so that’s a good thing).

Keep the records – You can’t wait until you’re rolling in money to start tracking it. The reasons are:

• The Government doesn’t like it
• Knowing what you make is the first step to increasing it
• Mixing and mingling business and personal finances isn’t helping anyone

There are a lot of reasons why businesses fail so don’t help that process along. Separate the business and the personal.

Basic accounting: demystified (money goes in to your business, money goes out. Tracking it is called accounting). You have no business insights until you can look at things in black and white. Accounting is all about a balancing act.

Assets = Liabilities + Equity

Kristen covered write offs and what is acceptable and what isn’t. If you’re having dinner with your best friend and you’re asking for business advice, you can write off the meal. Dropping off kids on the way to a business function? You can write off the gas. A lot of the business expenses can be tricky, but there are a ton of resources online to help you figure out the most appropriate way to do things. Are they ordinary and necessary? Then it’s probably a write off.

Eight things to remember.

1. Record it.

2. Find a sytem that works best for you.

3. Set a goal. Then track it.

4. Keep up with it. Reconcile it once a month – bank account, PayPal, written notes, etc.

5. Keep the personal and the business in separate cookies jars.

6. Don’t trust everyone. Input controls and safe guards

7. Get aware of the taxes you may owe (sales, SE) and plan ahead

8. Seek advice from an accountant / bookkeeper.

Next up is Liza who is a lawyer (but she quickly reminds us she is not OUR lawyer).

She asks “is your blog a hobby or a business?” A business is defined as something that if there is a reasonable expectation of earning a profit. Remember that getting stuff (like products) can count as income.

What kind of business are you? Liza explains how to Incorporate. You can do it by yourself and check Secretary of State Web sites for information and know that the costs vary.

Non-Profit Corporations are different. Liza recommends getting a lawyer for this. It’s very complicated and it’s tough to do it on your own. Sole proprietorships are pretty straightforward. But, if something goes wrong, you are personally liable. You may want to consult an accountant to make sure you understand business expenses, deductions, profits, etc. Partnerships (LLP) are great for small groups of people. If something goes wrong, the entity is generally liable, not individual partners. Write down an operating agreement (a WRITTEN understanding of who owns how much or what, who invests how much or what, plans for biz development, what happens if someone wants out. Discuss this among the partners first then hire a lawyer to make sure the document says what it needs to say to legally reflect your agreement.

Traditional Companies follow an LLC. It includes:

• Operating Agreement
• If something goes wrong, the entity is generally liable, not owner(s)
• Highly flexible regarding ownership / profit distribution
• Profits “pass through” to owners’ individual tax returns
• Owner must pay self-employment taxes

C-Companies need to have a Board of Directors, Officers, Annual Meetings and Annual Reports. If something goes wrong here, the entity is liable, not the owners. S-Corps need Board of Directors, Officers, meetings and reports. Profits must be distributed according to share of ownership, regardless of “sweat equity.” IRS limits on who can own stock in an S-Corp.

When you are hiring people (including volunteers) make sure you  have additional bloggers / writers documented through Writer’s Agreements. Who owns the written material? What happens if the site ends? Other Services include web design, accountant, consultants, marketing, lawyers, etc and everything should be documented through written contracts and proposals. Think through what you want to do in each of these instances regardless of whether or not money is changing hands.

Liza covers copyrights by saying “Don’t copy other people’s work” to which the entire room burst into applause.

If you make money on a blog, you are engaged in “interstate commerce” so minimum wage laws apply to you, even if you are a small business. Overtime laws apply unless the person is salaried and is a business manager. Unless you reach 15 employees, federal employment discrimination laws do not apply; your state my have different rules.

A few notes on blog policies: A best practice so that your readers and potential advertisers know how you do business is to have one. It’s not a legal requirement but it’s recommended. Keep in mind that if you create a policy, then ignore it, the FTC considers that a “deceptive trade practice.” This is especially important is you are not a solo blogger. It’s a good idea to create them, but make sure you are doing what you say you’re doing. This helps you create trust in your online community.

Blog policies include privacy, disclosures, advertising, comment deletion, point of view. You can also create a policy describing how you do business on any topic at all. It’s highly recommended you do all of the first three listed here and then add others as they fit your blog.

What should go into a Privacy Policy?

• What information do you collect from readers and how do you use it?
• Do you provide information to others?
• How do you protect and safely store that information?

Privacy Policy and Children – If you have a site with visitors you know or should know to be under 13, make sure you are complying with the Children’s Online Privacy Protection Act (COPPA). The FTC enforces COPPA and will levy penalities against those not adhering.

Disclosure Policy – How can we tell if a post is your opinion, compensated, donated product, etc? How can people tell if a link is part of an affiliate marketing program? Do you have any current or former relationship that might influence your opinions even if there is no present “material relationship?”

These policies are not required but many blogs have them. You can write them in your own voice and you can change them at any time.

Susan talks about Disclosure and why it’s an ethical best practice. Susan isn’t a lawyer and she is merely presenting her personal opinion on the FTC information which she has spent a substantial amount of time studying since its release.

Susan references the Blog with Integrity Pledge. (Segment is below)

I disclose my material relationships, policies and business practices. My readers will know the difference between editorial, advertorial, and advertising, should I choose to have it. If I do sponsored or paid posts, they are clearly marked.

Why disclosure is important:

1. Tells marketers / advertisers / PR representatives how they can work with you

2. FTC compliant

You should disclose your relationship with a company or group when you are writing about them. What are your business practices? Do you do reviews? Do you accept compensation? Do you run giveaways? Do you have affiliate relationships? Do you run sponsored posts or tweets? Note your opinion disclosure, especially for efficacy claims (“This reflects my personal opinion”).

Breakdown of FTC Guidelines on Endorsements and Testimonials:

• Require disclosure on relationships or compensation.
• Impose liability for false statements on both the company and the endorser
• Relevant to blogging if you:
  • Are compensated with cash, products or have personal interest in a venture’s success or failure (silent partner, etc). To protect yourself, disclose whenever you do product reviews, consulting, paid posts, post about a trip or other benefit.

Celebrities are subject to the same FTC guidelines that we are. (believe it or not) The FTC has made it clear they are focused on companies and advertisers, not the bloggers themselves. But if a company does get investigated and you are connected with one of their campaigns, make sure they have nothing that will bring you and your blog into the investigation. Companies should include disclosure information but if they don’t, cover yourself.

Ways to disclose:

1. Blanket site policy

2. Statement or disclosure within post

3. Statement of disclosure before post (not way at the bottom).

4. Category or tag on post (ie Sponsored)

5. Easily identifiable hashtag (ie #spon or #ad)

Problematic ways to disclose

1. Color-coded icon systems (too complicated)

2. Disclosures at bottom of post

3. Disclaimer in PDF form

4. Disclaimer is hard to find (on page meant for advertisers, not readers)

5. Generic disclosures that don’t apply to you holistically. Good for a starting point, but be sure to customize it and write it yourself.

You can see the whole presentation on Susan’s site (http://getgood.com/roadmaps/) when she posts it.