The journey from social media influencer to tech entrepreneur

The journey from social media influencer to tech entrepreneur

Social media has revolutionized the way we interact with businesses and with each other and has shown that it can be a generous friend to business owners and entrepreneurs, helping them to harness followers, build their brand and grow a global client base. The success of widely known brands, such as Body Coach, Huda Beauty and Glossier, is proof of this; Its founders have leveraged the reach of social media to sow the seeds for these highly successful businesses, and then scale them.

The UK has always been a place of innovation, and the pandemic appears to have led to more stimulus. During recent lockdowns, discover many (or rediscovered) talents, skills, and ideas, or simply make more time for their current feelings. By sharing posts on social media, they gain attention, attraction and even sales. You might be one of those people, and as the world adjusts to the new normal, now may seem like an opportune moment to tap into your followers, and like the founders of Floatplane, take steps toward launching your own digital platform or online business that allows you to supply digital content or goods or the Services independently of mainstream social media channels.

In this blog, we lay out some basic practical and legal considerations to help you get started.

Vehicle working and preparation

The first step in setting up a business is deciding what type of business medium to use. You can do business as a solo trader (i.e. where the company is owned and operated by you as a self-employed individual) or by setting up a corporate entity such as a private company limited by shares, and there are pros and cons to both options.

It is not required to register as a sole trader because there is no separate legal entity created but you will have to file an annual tax return every year in relation to your income. However, since there is no legal distinction between you as the owner and the business, you will have unlimited personal liability for business debts.

On the contrary, by trading as a private company limited by shares, the owners (i.e. shareholders) will have a legal personality separate from the company. If you are the sole shareholder and director of the company, your personal liability as a shareholder will be equal to the nominal value of the shares you own (as opposed to the market value of the shares). As such, you will likely have a minimum liability for any debts the company has. However, you should be aware that there are some limited circumstances where a company manager may take personal responsibility for his actions such as illegal trading.

A private company limited by shares can be easily set up and will require you to provide certain information to Companies House (eg, registered office address as well as details of directors and shareholders). However, there are some administrative costs and obligations that come with operating through this business medium, including annual filing of company accounts, the need to keep accurate internal records, possibly registering for VAT, complete company tax returns and paying company tax. For more information on setting up a company in the UK, please see our dedicated webpage here.

Domain Names and Website Creation

Once the company is established, you will need a website to direct your social media followers to so that they can purchase any goods, services, or digital content that you offer. For this you will need to purchase a domain name (i.e. a unique URL of the site that can be accessed from a particular web browser). You can buy domain names from various domain registrars like Go Daddy and Bluehost. Once purchased, you will only be able to use the specified domain name (subject to renewal). You might start with a “.co.uk” domain but if you want to engage customers outside the UK, you should consider purchasing additional domains like “.fr” (France). You can also decide to register domain names similar to your trading or company name to reduce the possibility of cybersquatting.

Website design and development

Next, you will need to start setting up the website. Unless you have the skills to design and build a site yourself, you will need to engage a web designer to do it for you. When you engage a designer, you must ensure that you enter into a clearly written website design and development agreement (“Agreement”) with appropriate safeguards to protect your business interests. Some of the basic things you may want to see in such an agreement include:

1. Project plan

You and the web designer need to clarify the website’s specifications and the timeline for completing the work. Website specifications may be included in the project plan attached to the agreement. The project plan might include information about how you want any designer-developed software to work, the target audience and any specific website design requirements you’re considering (eg, visuals, sounds, and layout).

Your project plan should also provide a roadmap for completion and outline the different steps that a website developer will take in order to meet the agreed specifications. For each stage, it is a good idea to note the agreed time frames for completion. You may also wish to pay after completing each stage of development (in which case you must provide payment plan details) or upon acceptance of the website.

2. Location information and access

Under the E-Commerce Regulations (European Commission Directive) 2002, a service provider with an online presence is required to clearly identify itself to customers and website visitors, including by providing contact information with a company registration number and a VAT number if applicable . The E-Commerce Regulations in addition to the Consumer Contracts (Information and Additional Charges) Regulations 2013 require you to provide an explanation of the steps needed for a customer to enter into a contract with your business as well as details of how to amend the contract or order prior to its conclusion. This content must be prominently and conspicuously displayed to the customer as part of the ordering process.

Most importantly, the website should also be designed in a way that is easy to navigate to help ensure it meets the requirements of the Equality Act 2010 which makes it illegal for UK service providers to discriminate against a person with a disability.

3. Intellectual property rights

In the absence of a legally binding written agreement to the contrary, the intellectual property rights in the Site including its content and any underlying software will vest with the web designer or its licensors. It is therefore necessary that you include a clause in the agreement whereby the designer expressly waives all intellectual property rights in the Website to you or your company (depending on whether you are a sole trader or through a company) (or at least all intellectual property rights in the Website except the IP third party developer tools and rights in their developer tools which may alternatively be licensed to you). This waiver will only be effective if in writing and signed. Without owning (or at least licensing) an IP address, you will not have complete control over the use of your website.

To protect yourself from losses arising from a third party claim of intellectual property infringement, you can also ask the designer for compensation to be included in the agreement. If you wish to use the intellectual property rights of a third party on the Website (such as images or music), you must obtain the required permission before doing so.

4. Acceptance test

Acceptance testing is critical to ensuring that the site meets agreed technical and functional specifications. It is up to you to agree to what form the exams should take and stipulate in the agreement. Your right to terminate the Agreement and obtain a full refund will be beneficial if the Website fails acceptance tests and has not yet passed an agreed number of retests. The escalation process for dispute resolution is also a good idea for a large development project where it will be difficult for the alternate designer to take over.

Once you have your website finished, you will need to engage the website host in order to run the website on a server so that it can be accessed over the internet. To this end, you will need to enter into a website hosting agreement with a host, as many of the issues addressed in this blog will again be relevant such as specification of the server on which the website will be hosted and acceptance testing.

Online business terms

Whether you plan to use your website to sell digital goods, services, or content or you want people to sign up for regular access to your website, you’ll need a tight set of online terms and conditions. These conditions must meet certain requirements of fairness and reasonableness depending on whether the offer is intended for commercial customers or consumers. We provide top tips for crafting consumer facing terms and conditions online in our video here.

data protection

When you collect personal data from visitors and customers through their use of the Website, you will need to tell them how to take care of their personal data and determine their privacy rights in accordance with the basic principles of the UK General Data Protection Regulation. Please visit our data protection resources for more information about how we can help you with data protection compliance and other privacy issues.

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