Hello Frank,
    I’m located in Germany as an individual and therefore I normally get handled under German law. My project however is written in English for the U.S. market. Do I need a Privacy Policy nevertheless? Or do I have to register a LLC or a Limited Corporation?

    Thanks for your help,

    Hi Valentin,
    The questions in your reply hit on very important legal and business matters. I address these matters in two parts below.

    About the Privacy Policy:
    To protect yourself and your business from law suits by the FTC or US resident users (or originating from any other country, including Germany) and avoid the possibility that your website being filtered by safe-browsing programs you should place a notice of your Privacy Policy (and Terms Of Use) on your website (and a link at the footer of every page, because the user may access your site through web-links on other sites and search engines.) Also, Google Adsense / Adwords has specific Privacy Policy requirements. 

    About organizing an LLC in the U.S.:
    Typically, when running a website or conducting business through your website, you will not have to organize an LLC or otherwise register a business with any state within the U.S. The laws governing these transactions will usually be of the jurisdiction you are conducting business. This statement has its technicalities, such as the jurisdiction where your website and transactional information is stored. Also whether you plan to hire employees residing in the U.S. and if you conduct a significant amount of your business within the U.S. At the very least these factors may give U.S. courts jurisdiction to hear claims against you or your website or business. This is where a good Terms of Use is important.

    A Terms of Use cover a range of issues, including disclaiming warranties and limiting your personal and business liability. However, this is where the option to organize an LLC or S-Corp–by which crating a separate legal entity from yourself–should be considered. Because where the limitations and disclaimers of the Terms of Use may be limited or fail in protecting your business from a lawsuit you as a sole-proprietor (or partner in a partnership) will be personally liable for the same kind and amount as your business. This circumstance is true for businesses in general, regardless whether over the internet. In considering this option, you are not limited to organizing a LLC in the U.S. I assume Germany probably provides similar options and should be less work for you to comply with yearly filing and tax requirements. Moreover, should limit your exposure to U.S. jurisdictions.

    In addition, making the decision to form an LLC does not have to be made before you open your business and website. If you decide to later, your Privacy Policy and Terms of Use should be updated to reflect the ‘LLC’ or ‘INC.’ status of your business, and give current users and customers notice of the change of status (also, notify of the name change of your business if applicable).

    However, if you choose to form your business under the laws of Germany, be sure that the entity you choose limits your personal liability. (Corp, LLC; a business entity that you have to register with the state in order to legally create the company. For example, Partnerships don’t require to be registered to be formed, and typical you remain fully personally liable. (I’m writing this response in broad terms because I am not familiar with the laws of Germany. To be sure I suggest calling your secretary of state to get informed or talk to a local attorney.)

    Good Luck,

    Frank Rappa


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