Legal Protection in the Digital World: Why Every Web Designer Needs an LLC

What’s the best part of being a web designer? Depending on who you ask, the answer might be the creativity that the profession requires, or perhaps the deft balance between the technical and the purely aesthetic. Still others might point toward the field’s inherently collaborative nature, or to the chance at helping businesses bring their digital vision to life.

Now what’s the worst part of being a web designer? Certainly high on the list is the risk of legal peril. While web design is not an especially litigious environment, there are still real-world possibilities that a disgruntled client might bring legal action against a designer or an agency. This can be a headache and a hassle at the very least, a financial calamity at the worst.

One Way to Minimize Legal Peril: Start an LLC

The good news is that there are steps any design company can take to reduce its legal jeopardy. And one of the most critical steps of all is to choose the right company structure. The limited liability company (LLC) structure is most advantageous in this regard.

What is an LLC?

An LLC is a business structure that creates a whole new legal entity. So, when you have a Sole Proprietorship, there is no legal differentiation between the business, and the business owner. The owner takes on all of the company’s assets, but also all of its debts and liabilities.

LLCs work differently, allowing you to maintain a clear dividing line between personal and business. There are several important implications to this, foremost among them personal liability protections.

Personal Liability Protection: How LLCs Reduce Legal Risk

If you have an LLC and someone brings a lawsuit against the company, they may be able to seize some of your business assets. But all of your personal assets are off the table, protected not just from lawsuits but also from creditors. So, as a web designer, you won’t have to worry about the courts seizing the financial resources you share with your family, or have stashed away from retirement. 

In short, the LLC can provide web designers with peace of mind that a lawsuit will not be personally ruinous, even if it might take a bit of a toll on the business itself.

Registering an LLC

Registering an LLC is usually a pretty simple task, with minimal administrative effort required on the front end. It mostly involves filing some documents and paying a fee to your state government. How long does it take to get an LLC? In many states, you can complete the process in a single afternoon.

Why Web Designers Need LLCs

One question remains: Why might web designers have a particular need for these kinds of legal protections?

Again, web design work is not known for being especially prone to lawsuits. And yet, any time you’re doing work on behalf of another business or entrepreneur, you open yourself up to legal threats, especially if it’s alleged that your work has cost your client their competitive advantage.

In particular, there are a few common reasons why web designers might get hit with lawsuits.

1) Errors

Simply put, web designers are human beings, and they sometimes make purely unintended mistakes. This could involve accidentally introducing a bug into a piece of software, or it could involve inputting the wrong information into a document.

A small, honest mistake is likely to be forgiven, but a more consequential error may result in a lawsuit… especially if it ends up damaging your client’s reputation or costing them business.

2) Confidentiality

When you’re working with a client, you naturally obtain private or confidential information about their business. Often, this information is vital for creating the best possible design work. However, it’s your responsibility as a designer to safeguard and steward this information well.

This means showing discretion when you talk with any potential competitors, but also exhibiting prudence in casual conversations. If you let something slip that you shouldn’t, it may result in a legal threat against your web design business.

3) Intellectual Property

Along the same lines, your web design company could face legal danger for any violation of intellectual property (IP) rights. This encompasses copyright and patent infringement, but also plagiarizing someone else’s work. Even duplicating your own work can be an ethical and legal violation that lands you in legal hot water.

It’s especially important for designers to be attentive to open-source licenses and requirements, and to understand that, if a client assumes whole ownership of the completed design work, the designer can no longer use it for themselves.

4) Security

Today’s cybercriminals are increasingly sophisticated and increasingly clever. They find all manner of entry points to invade a website and steal confidential information.

If your client’s new website is infiltrated by a hacker, it’s unlikely to be your fault as a designer. Even so, it’s not unheard of for clients to hold their design firms responsible for any breaches that occur. This is one area in which having the protections of the LLC can be incredibly important.

5) Noncompetes

Finally, be mindful of noncompete agreements, which would bar you from working with any other client in the same industry as a current client. While noncompete language has largely fallen out of favor within the web design field, you still see it sometimes, and running afoul of it could result in a legal threat.

Preventing a Lawsuit

Web design work can be incredibly rewarding, especially when you’re free to focus on being creative and on providing satisfaction to your clients. Navigating potential legal peril is one of the tougher aspects of the job, and yet these concerns can be toned down simply by choosing the right legal structure. For a vast majority of web designers, this means registering your business as an LLC.