Be Aware of Laws for Web Businesses

Small Business | IN BOX

August 09, 2006 | Karen E. Klein | Special to The Times

Question: I’ve heard that most business laws are designed to regulate large corporations. I have a small online business. What laws do I need to be aware of?

Answer: It’s a mistake to assume that most business laws do not apply to you as an online entrepreneur.

No matter how small, your company is regulated by state and federal laws — and even city and county ordinances — that govern issues as diverse as finance, employment and privacy.


To find out which laws your company must follow, start by researching California’s government website at

Follow the business links for comprehensive information on legal regulations and doing business in the state, advised Kevin McDonald, security expert and vice president of Alvaka Networks, a computer networking firm based in Huntington Beach.

You should also meet with an attorney specializing in small business. “By being proactive and learning about the legal landscape, you can avoid liability and risk,” McDonald said. Join a business association or networking group such as your local chamber of commerce.

These organizations keep small- and medium-sized business owners abreast of new state and regional laws.

“When it comes to federal law, consider a membership in a national professional or trade organization made up of businesses in your industry,” McDonald said. “They usually have someone dedicated to keeping abreast of changing laws and key issues taking place across the country.”

Online businesses must be particularly careful about privacy laws, which are changing rapidly. “There are so many new security and privacy laws affecting small businesses, it’s hard for most managers to keep up with what applies to them,” McDonald noted.

You should be aware of a 2003 law, known as California SB 1386, that requires companies to report breaches of security that involve consumers, McDonald said.

“This means all businesses must report to law enforcement any loss or unauthorized disclosure of private information, such as any combination of first initial and last name plus a specific account number, Social Security number or other personally identifiable information,” he said.

Have your computer technology provider audit your online security systems to see whether your company is meeting the legal requirements of SB 1386 and other privacy laws, McDonald advised.

Q: I am starting a landscape design business and will be working from my home in Fountain Valley. I’ll be designing from home, but the actual jobs could take place anywhere. Do I need a business license only for my city?

A: Typically, every city and town in California requires that anyone doing business there be licensed there.


“This includes residents working out of their homes and out-of-city businesses such as contractors,” said Jack B. ReVelle, a counselor with the Orange County Chapter of Score, at, a nonprofit business consulting agency.