Five Legal Steps to Start Your Canadian Coaching Business on the Right Foot

In the past three years, I have helped many coaches, from business coaches to health coaches to life coaches (and many more) to start and grow their businesses online.

Here are my five legal steps to help you start your Canadian Coaching business on the right foot, whatever your type of coaching practice.

1. Choose a legal structure and register your business in your province.  

When you start a business in Canada, you have a choice of three legal structures - sole proprietorship, a partnership, or a corporation.  

Most businesses start as a sole proprietorship because it is the most simple and inexpensive way to start.  If you start this way, you can change your legal structure down the road when you grow.

Sole Proprietorship

Running your coaching business as a sole proprietorship is the most simple and straightforward option.  You don’t need to create a separate legal entity, but you're required to register a business name if you're using a name that is not just your personal name.

Since there is no liability protection, with a sole proprietorship, you need to make sure to think about ways to protect yourself personally from business liabilities through contracts, waivers and commercial insurance. 

Partnership

If you're running your business with more than one owner, your choices are a partnership or a corporation.  A partnership would not be a common choice for a coaching business.  

A partnership is defined as two or more people carrying on a business in common, with a view of profit.  If a business meets the definition of a Partnership, the business falls into the default partnership rules, whether the partners intend to or not - even if you're not registered.

 The big thing about running a business as a Partnership is that the Partners are jointly and severally liable for the liabilities of the business.

 Each province or territory in Canada has a Partnerships Act which sets out the default rules for partnerships. A Partnership Agreement is an agreement between the Partners stating how they will make decisions, share profits and expenses and how the partnership can add partners or end.

Corporations

A corporation is a separate legal entity that is created by incorporation under federal or provincial laws, and has all of the legal powers of a natural person like signing contracts, owning property and hiring employees and contractors.

If you want to consider all of the factors about when to incorporate, you can check out this quiz.

 By creating a corporation to run your coaching business, you may be able to take advantage of liability protection that comes from having a separate legal entity.  A corporation may also be able to use legit tax planning strategies to save and defer income tax (talk to your accountant about this).

 A corporation is required to file its own income tax return (T2) and to maintain its own separate corporate records like a minute book.  

2.  Make a Coaching Agreement template to create clear expectations with your clients.

 Whether you meet coaching clients in person or online, it’s important to create clear expectations upfront at the beginning of your relationship.  

Contracts = Enforceable promises.  Besides creating clear expectations, contracts can also help you to legally enforce the promises that you and your clients are making to each other.

Having a written contract template as part of your client onboarding will help you to create a consistent process and give your clients confidence in your business practices.  

 With respect to Coaching Agreements, there are some particular types of clauses that are important to be included: 

• Scope of the Services;
• Fees and Payment information;
• Cancellation policies;
• Coach Duties and Responsibilities;
• Client Duties and Responsibilities;
• Confidentiality and Privacy Clauses;
• Protection of Intellectual Property (Content); 
• Liability Protection (Disclaimers); and
• Various Boring but Important Legalese.

 If you want, you can have clients sign your contracts electronically rather than in person.  This is 100% enforceable and has the same effect as ink on paper.  There are three main ways to get a contract signed electronically - (1) e-signature program (ie. Docusign), (2) checkbox with a hyperlink to agreement on checkout, or (3) sign and scan PDF copy.

3.   Put a Privacy Policy and Disclaimers on your website.

 While you may use social media in your coaching business, your website is your online home for your business.  It is where you welcome new coaching clients, and prospects can learn more about you and your services.

 You have probably spent time making your website look sharp and tweaking your message and content, but you also need to think about some legal things, including a Privacy Policy and Disclaimers.

 Privacy Policy - You're required by law in Canada (PIPEDA and provincial laws) to have a privacy policy when you're collecting “personal information”.  Your privacy policy will contain certain information including what information you collect, how you use it and in what circumstances you'll share information with third parties (like using third party software).  If you’re collecting personal data from parties in the European Union, your privacy policy should also comply with the GDPR legislation.  

Website Disclaimers - It is important for your Website to have a legal disclaimer for several different purposes.  You should tell your website visitors that you're providing information but not professional advice through your website. You want to make it clear that visitors should not rely upon the information on your website as a substitute for professional advice from someone who understands their situation.  Your disclaimer should be transparent about any compensation that you receive for recommending any products or services.  Although not required by law in Canada, your disclaimer may wish to be clear that particular results are not guaranteed and any testimonials or endorsements are not indicative of similar results.

 Copyright Notice - To protect the content on your website, you should have a copyright notice - i.e. © Online Legal Essentials Inc. 2021. All Rights Reserved.  This serves as a reminder that you own the copyright to the content and others shouldn’t use this content (writing - blog posts, product descriptions, photos, videos, podcast audio) without your permission. 

 Website Terms of Use - The website Terms of Use bring together the copyright notice, privacy policy and disclaimers and provide other rules for how people can use your business website. You should define acceptable and unacceptable uses of your website for visitors and give yourself remedies for unacceptable use.  Your terms of use can also include such commercial contract terms as refund policy, price changes, additional fees etc. 

4.  Understand copyright laws so you can protect your content and not infringe on the rights of others.

 In a coaching business, you’re likely to be creating both free content (social media, email marketing, freebie downloads) and paid content (coaching programs, online programs).

 Copyright laws protect your content and also the original content created by others. Copyright is the exclusive right to produce, reproduce, sell or license, publish or perform an 
ORIGINAL WORK or a substantial part of it.

 To establish copyright protection in your content, you must be able to show the following three elements:

1. Originality- the content came from the owner, it was not copied and it shows creativity.
2. Fixation - the content must be fixed in some form of expression. Copyright does not protect facts or ideas.
3. Authorship - the content must come from a human being 
(not a machine - AI can write a bad song but it can not have copyright protection in it ).

Copyright protection is automatic upon creation (registration not required) and is worldwide through international treaties.  Copyright protection lasts for the life of the author plus 50 years (will be 70 years in 2022).

Four types of copyright-protected content are: 

1. Literary - blogs, books, websites, and presentations
2. Artistic - photos, drawings
3. Dramatic - plays, movies
4. Musical - songs, sound recordings, podcasts

 A copyright symbol © can be used to mark your copyright-protected content, like coaching materials, webinars, presentations and images, to indicate your ownership.  You can place your copyright notice to remind people of your ownership and indicate how to get your permission to use it.  

 Copyright infringement occurs when a person, without the consent of the copyright owner, exercises one of the exclusive rights of the copyright holder, such as selling or reproducing a work.

You should ensure that you're not infringing on the rights of other people’s content and you should put in place procedures to police unauthorized use of your content.  If someone uses your content without your permission, you can enforce your rights through a cease and desist letter and court action if necessary. 

 If you’re using other people’s tools in your coaching programs (personality assessments, quizzes etc.), make sure that you have proper permission to use them for commercial purposes.  You may need to get a license, written permission or give credit to the original copyright owner.  You’ll need to investigate the copyright terms to determine what process needs to be followed.

5.  Create a Contractor Agreement so that you can create clear terms with people you're hiring to help you grow your coaching business.

 You're likely to be hiring people to help you with various tasks as your coaching business grows and scales.  These could include experts for particular projects (website designers, photographers) or ongoing support (virtual assistants).

It is important to understand the differences between hiring employees and contractors and the difference legal and tax implications for each.

 When you're hiring a CONTRACTOR, you don’t need to worry about employment laws (they do not apply) but you do need to get all the important details of the relationship and the work in the written contract.  From a liability perspective, you can make contractors liable for their own work (and tax obligations).

 When you're hiring an EMPLOYEE, you need to set out clear expectations with your new employee in terms of their job duties and the terms of their employment.  Most employees are covered by provincial employment legislation while employees in some industries (banks, transportation, telecommunications) are covered by federal legislation.  From a liability perspective, you're responsible for the actions of your employees and have certain tax reporting and filing obligations.

 There are other important differences for businesses between hiring contractors and employees, including in the areas of copyright ownership.  Unless otherwise agreed in a contract, copyright-protected works belong to the business and if created by contractors, the copyright belongs to the contractor.  You can change this if written into a hiring contract.

Many online businesses hire virtual assistants (VAs), who are usually hired as contractors.  Even if the VAs are located outside of Canada, you can sign a contract to establish clear expectations upfront.

Conclusions:

From the time that you get your first coaching client, it is important to realize that you are running a business. 

Improving your legal literacy and taking some important steps to protect yourself and get on the same page as your coaching clients will make you look professional and also help start your Canadian coaching business on the right foot.

To help Canadian coaches, I have created a legal template package for new coaches and one for coaches who are also planning to deliver online coaching programs, courses and memberships.

Have questions?  Feel free to reach out to me by email at [email protected] or DM me on Instagram @lawyercorinne.