Life coaching isn’t a strictly regulated industry. However, like running any other business, it has a few legal requirements.
From establishing a business to laying down your terms and conditions, here’s what you need to do to operate a professional coaching practice.
Are There Legal Requirements for Life Coaching?
No, you don’t need formal education or certification to practice coaching. Many transformative coaches are changing lives every day without formal training on their resume.
However, you need some form of training to be an efficient coach. You’ll need to learn foundational coaching models and tools to deliver results to your clients and conduct your sessions professionally.
Whether you’ve gained your methodology and experience from past job opportunities, a coaching certification program, or other training, the point is ultimately to help your clients.
Choosing the tools you use for that is entirely up to you.
A coaching certification can equip you with structured frameworks and a coaching methodology that has been tried and tested. Many also teach you step-by-step processes for client acquisition and include mentoring with experienced master coaches.
By completing a comprehensive coaching certification, you’ll gain 100+ hours of practice and training, which will allow you to stand in front of your first client with the confidence that says, “I know what I’m doing.”
Whether you start your coaching career with a certification, pick it up later on, or decide that you don’t need one at all is a choice you need to make yourself.
[ Read: Navigating The Coaching Industry: Do You Have To Be Licensed To Be A Life Coach?]
A Word on Ethics
Coaches are free to make up their own rules and methodology how they want to—for the most part.
But, there are certain ethical guidelines that all coaches should be aware of, regardless of whether they are in health, business, or life coaching. The International Coaching Federation (ICF) has a comprehensive summary of these ethical guidelines on their website.
You don’t need certification to be ethical and professional, but you must do the right thing.
The Legal Requirements for Starting a Coaching Practice
Registering Your Business
When starting a coaching business, you have two options. You can either run your business solo or register a company, allowing you to hire a team.
You’ll have a sole proprietorship business if you provide coaching services as a freelancer or self-employed individual. This means that you solely own the business and are liable for all legal aspects.
You still have the option to register this business under another name (“doing business as”) if you want to build a brand separate from your own.
To establish a company independent of you and hire employees, you must register an LLC or limited liability company. It’s a costlier option requiring more paperwork but allows you to expand your coaching business later.
It also protects you from personal liability, meaning that if your business is sued or if it declares bankruptcy, your personal assets (including your home and vehicle) won’t be at risk. To be safe, you can also draft an LLC operating agreement.
[ Read: How to Start a Life Coaching Business in 7 Totally Achievable Steps]
Once you’ve registered your business name and got your tax identification number, you’re ready to operate as a legal business entity. This will be needed for invoices, payment gateways and payroll tools. If you want to protect any verbal or visual elements of your business from being copied or used by others, you can also consider registering one or more trademarks as your own intellectual property.
As per your business activity, you don’t need to acquire any business permit or license to work as a coach unless you offer therapy or counseling services.
Adding Legal Disclaimers to Your Website
If you accept bookings or payments through your website, it’s best to link to your terms & conditions on your checkout page. This will practically serve as a contract between you and your client that they must accept to sign up for your services.
[ Read: Use These Terms and Conditions to Keep The Drama Out of Your Coaching Business]
A privacy policy on your website will also help inform your website visitors, particularly clients who book your services or sign up for your newsletters, how their data will be used. To further protect your coaching business, consider implementing an Identity Verification Process during client sign-up to ensure the legitimacy of every client interaction.
With data protection laws getting stricter in the EU and the US (such as GDPR and CCPA), you can’t use the private information of your website visitors without their consent.
Indicating how you’ll use their email address and name before they hit sign up will protect you from future lawsuits on private data. Plus, let’s be honest: No one likes to be spammed without knowing what’s coming.
Last but not least, if you have any copyrights or trademarks on your coaching name or logo, you can also indicate that on your website.
Luckily, if you manage your schedule, contracts, and payments through Paperbell, you don’t have to deal with this. Your landing page, checkout page, and client information will all be set up for you. You can sign up for a free account to try out every feature.
What’s Legally Binding Between You and Your Clients?
Technically, everything you and your client signed in a contract.
This is why having a legally binding contract for every coaching partnership is so important, even if you only coach them for half an hour. If anything goes south in your coaching relationship, this will be your primary point of reference to settle disagreements and legal disputes. Using inhouse legal software can help streamline contract creation and management, ensuring all terms are clearly defined and easily accessible.
At the very minimum, your contract should clearly describe the services you’re providing to your client. You need to specify the number and duration of your sessions, the fees your clients pay for, and what they actually cover.
You’d be surprised by how many people confuse coaching with consulting and therapy, so it’s good to indicate which one you offer in your contract. Lay out the terms and duration of your coaching engagement, and the termination and cancellation policy your client must follow.
[ Read: How To Create A Legally Binding Coaching Contract From Scratch]
If you establish clear and open communication with your clients and respect your own terms, you should face no legal troubles in the future. And of course, we recommend using Paperbell to ensure that contract signing is an automatic part of the sign-up process for every new client.
How to Be Safe From Legal Troubles as a Coach
The best way to protect yourself against any lawsuits is to get insurance.
There are plenty of coach-friendly insurance companies with packages for small business owners. These typically offer a business owner’s policy (BOP) that lets you customize your coverage.
The most common part of a BOP is Professional Liability Insurance. It protects you as a coach (or your business as an LLC) from any accusations of negligently performing your services.
You can also apply for the following:
- General Liability Insurance against general claims on damage to property or personal injury
- Commercial Property & Auto Insurance to secure your business assets, such as your office and car
- Cyber Liability Insurance against any data leak regarding private client information
- Workers Compensation Insurance, in case you have employees to pay
Life coach insurance also covers the cost of hiring a lawyer, which can otherwise come up to thousands of dollars, if not more.
FAQ
Do You Need a License to Start a Coaching Business?
No, you don’t need any business permit or license to start a coaching business. However, you need one if you work as a therapist or counselor.
Do You Have to Be Certified to Be a Life Coach?
No, certification is not legally required to be a life coach, but it can enhance credibility and demonstrate a commitment to professional standards.
Do You Need to Register Your Coaching Business?
Yes, any business activities you run should be registered as either a sole proprietorship or an LLC.
Is it Legal to Call Yourself a Coach Without Any Qualifications?
Yes, anyone can become a coach and start offering coaching services regardless of their qualifications.
Do I Need a Contract to Coach Someone?
It’s not a legal requirement, but you should only coach with a contract to set clear expectations for your clients. At the minimum, your contract should describe the services you offer (or don’t), your cancellation policy, and payment terms.
It’s Time to Get Your Coaching Business Running
Now that you know how to make your coaching business legal, here’s how to make it efficient.
Paperbell is an all-in-one client management system that handles your contracts, payments, bookings, and all the nitty-gritty tasks of keeping your coaching business in order.
Create a free account to test out Paperbell, and thank us later for the hours it frees up in your schedule.
Editor’s Note: This post was originally published in September 2021 and has since been updated for accuracy.
