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Legal requirements for life coaching - How to legally start mentoring people

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Updated on:
December 11, 2022
December 11, 2022
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For some people, life coaching is a natural and very rewarding career choice. But to make sure that you are playing by the book, you need to follow the legal requirements for life coaching.

Officially, this job is not listed in the Bureau of Labor Statistics (BLS). However, this does not mean you are spared the legal aspects. If you want to become a life coach, this article will present all the legal requirements you need to know.

Note: if you are a coach, try Bonsai's suite of small business tools to help you run your business. From proposal, invoice, and life coach contract templates to tax and task management software, we have it all. Claim your 7-day free trial here.

What Is a Life Coach?

A life coach is a person that uses their knowledge to guide, help and empower other people. The 'patients' of life coaches are usually those who cannot reach their full potential and realize their life's vision, which makes it difficult for them to achieve their goals.

A life coach is there to fill in the blanks, guiding the person in the right direction. They help you identify what your weaknesses and strengths are but also see the things that are holding you back.

Does a Life Coach Need a Degree?

There is no need for you to hold a degree to run a coaching business. That being said, life coach requirements generally imply some sort of certification.

Most life coaches start with a certain background to which they do get a degree. This can be anything from social work, human resources, accounting, psychology, and more. This will give them the educational background to start working with clients.

With that background, they can apply to be an associate-certified coach. When becoming a certified life coach, this is more or less a business license. However, you still need to prove that you are fit to coach others.

For this reason, you may want to look into companies that offer accredited coach training. After you put in the minimum hours, you will be able to obtain the document proving that you are a certified life coach.

Types of Life Coaching Services

Not every professional certified coach is the same, as they may offer different services. Some coaches may focus on mental health, whereas others may narrow it down to fitness.

For example, if you struggle with your career or interpersonal background, you may go for a life coach that has a social service background. If you have issues with keeping the aspects of your life organized, a life skills life coach may also help you get your life straight.

Many other types of life coaches focus on aspects such as spirituality, sports, finances, dating, and more. You just need to pick the type that can offer the coaching training that you need.

How Do Life Coaching Services Work?

Life coaches meet regularly with their clients, usually on a one-on-one basis - although group life coaching sessions are also fairly common. It mostly depends on the services provided by the life coach, but also the preferences of the client.

The life coaching sessions may take place in an office run by the business owner, or through video conferencing online. Sessions can last between 30 and 90 minutes, depending on the needs of the client or the availability of the coach.

Legal Requirements for Starting a Life Coaching Business

When you are starting your business as a life coach, there are certain steps that you need to go through. The more attention you pay to the paperwork, the easier it will be for you on the legal part. Here is what you have to do:

Register the Business

The first thing you must do to make your business legal is to register it. You can either run it as a sole proprietorship, or you may register it as an LLC so that you can hire people as well.

The latter option is slightly costlier, but it will allow you more expansion. This way, if you dream of offering several types of life coach services to people, then you can hire more trained coaches in your service. This way, you also get more liability protection.

Once you have the business name ready and your tax identification number is all set, then you may begin to function as a legal business entity.

Note: Try Bonsai's software to get access to invoice, contract and proposal templates for life coaching. Our library of pre-made templates allows you to easily customize and send these documents to new potential clients. Try a 7-day free trial here.

Add Legal Disclaimers

The best way to protect yourself from a lawsuit or any other legal issues is to make sure that you have all of your legal disclaimers in check. After all, your clients won't be able to hold against you something that you made clear from the very beginning.

On the checkout page, make sure that you include the terms and conditions. This will serve as a contract between you and your client. Platforms such as Bonsai will help you with a template so that the client can find all the necessary information.

A privacy policy should also be added, disclosing how you collect the information, as well as what you are doing with it. If they want to remove themselves from your newsletter, they'll need access to that service as well.

In your life coaching questionnaire, be sure to ask your client if they have any health issues or things you need to be aware of before you engage with them.

Obtain Life Coaching Certification and Credentials

There are no formal education requirements necessary for life coaching, and as the job is not regulated by a federal or state agency, there is no need for a license.

However, you should get a certification to legally practice your skills. There are numerous companies out there that offer life coaching certification. In the end, you may become either an associate certified coach, a professional certified coach, or a master certified coach.

Different levels of certification will require you to put in different hours. For instance, if you are going for the Associate type, you will require 60 hours of accredited coach training and an experience of 100 hours.

On the other hand, if you are going for Master Certified coach training, then you'll need 200 hours of professional coaching training and 2,500 of coaching experience. The programs are often broken down into the following courses:

  • Training of your coaching skills
  • Training for work ethics
  • Coaching to be a mentor
  • Observation (practice)
  • Final examination

The higher your credentials are, the more reliable you will appear. You might want to use only legitimate credentialing bodies such as the International Coach Federation (ICF), as they can deliver coach-specific training of the highest standards.

How to Avoid Legal Issues

There are several ways for you to avoid legal issues if you are a life coach. First and foremost, you need to sign up for insurance for life coach businesses.

There are many insurance companies out there that offer insurance packages for life coaches and small business owners in the mental health industry. Usually, they provide a plan called the Business Owner's Policy (or BOP), where life coaches can customize their selection.

Among insurance packages, you may apply for the following:

General Liability Insurance

Many life coaches usually go for general liability insurance. Not only can it cover claims on personal assets and potential damage, but it can also cover your company in the possibility of personal injury.

Cyber Liability Insurance

Nowadays, more and more companies are facing threats from hackers and cyber-scammers. With that in mind, most life coaches hold personal data about their clients, which must be protected. A breach will not only affect the coaching relationship but also the security of the client.

This is where cyber liability insurance comes in. If your business falls under the attack of hackers, you are legally protected.

Commercial Property and Auto Insurance

This type of insurance is specific to assets such as your vehicle or your office. It doesn't matter if it is a home office, as long as it is listed under your life coach business.

Workers Compensation Insurance

Many life coaches work independently, which means that they are doing all the work. That being said, if you take on employees and you have to make regular payments, then you may want to go for worker's compensation insurance.

For this type of insurance to work, you must use a payment app fit for an associate-certified coach. Bonsai, for instance, allows you to make quick payments while helping you with your paperwork.

Whether you need a life coach contract, proposal, or invoice to act as support for your insurance, Bonsai can provide a template for it. These templates are approved by the International Coaching Federation and were made to get you out of a legal bind.

The Bottom Line

People struggle with a lot of things every day, which is why they might look to personal coaching as a solution. The career choice can be very rewarding, but for you to succeed, you must take care of the legalities. Hopefully, our article brought you the information that you needed.

Build your own customized coaching proposals, quotes, contracts in minutes. Let us handle the legal.
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