GDPR Compliance for Small Businesses in 2024

As a small business, you probably have so many things to think about: growing your network of clients, keeping up with the latest trends, monitoring your performance, maintaining an online presence, and the list could go on and on! But there’s one thing you shouldn’t overlook, and that’s compliance with privacy laws, such as the EU’s General Data Protection Regulation (GDPR).

According to a recent study by Cisco, 87% of respondents have stated that privacy is a priority and 33% of them are willing to take action when it comes to protecting their data (this percentage reaches 42% with younger generations).

Not to mention that non-compliance with privacy laws can cost you dearly. If you’ve ever heard about GDPR fines, then you probably already know that they can reach huge amounts.

With these stakes, better not to risk it!

In this article, we’ll give you a general overview of GDPR compliance for small businesses. These are the essential steps when you’re just getting started.

What is GDPR?

GDPR stands for General Data Protection Regulation, and it’s an EU Regulation that came into force in 2018. It regulates the collection and processing of personal data carried out by a controller or a processor in the European Union, regardless of whether the processing takes place in the Union or not. The GDPR also gives European users more control over their data and how it can be used.

Does the GDPR apply to you?

First things first, you need to determine whether the GDPR actually applies to you. The GDPR usually applies in three cases:

• You are based in the European Union.
• You are not based in the European Union, but you target EU-based users.
• You are not based in the European Union, but you monitor the behavior of EU-based users.

If even one of these applies to you, then you need to comply! For example, let’s say that you are a small business based in the United States, but you have customers in Germany: you would need to comply with GDPR because you provide a service to users based in the EU. It doesn’t matter if you don’t have a branch in the European Union.

Please note that the GDPR is only one of the many privacy laws around the world. So, doing business in multiple countries could subject you to other jurisdiction’s privacy legislation.

What’s personal data under the GDPR?

The second thing you need to understand is the definition of personal data under the GDPR. Many business owners don’t think they need to comply with the law because they assume they don’t collect any data. This is not always the case.

Under the GDPR, personal data has a broad definition. It refers to any data that can identify a living person, even if it’s only partial information. Examples of personal data include names, personal email addresses, payment information, genetic data, but also web data such as IP addresses.

With that said, you can see how almost every website collects data: all it needs is an analytics tool.

Assess your data processing activities

The next step would be to assess your data processing activities, which will later help you determine what you need to have to comply with GDPR. Put simply, you need to identify the data you collect and the purposes for which you need it. For example, do you use an analytics tool to monitor the performance of your website? Or do you have a contact form that users can fill out to send you a request? Keep in mind that you may also be using third-party applications or services that collect personal information. One example is social media widgets.

Here, you also need to determine the legal basis of your processing, which is the reason why you need the data in the first place. The GDPR has six legal bases: consent, legitimate interest, contractual necessity, public interest, legal obligations, and vital interest.

This is also the moment to identify any vulnerabilities your website may have, to make sure you’re doing everything you can to prevent data breaches. The GDPR emphasizes the importance of data security as well as data privacy, and you should take all necessary measures to avoid putting your users’ data at risk.

Create your legal documents

Now it’s time to create your legal documents. These are essentials because they inform your users about your activity. That’s why you should link them on every page of your website (usually, in the footer).

A small business would usually need the following.

1. Privacy policy

The privacy policy is the legal document that outlines how you collect, process, and protect the personal data of your users. A privacy policy should be accessible and easy to understand.

It’s difficult to say what exactly should be in your privacy policy, because the content would vary depending on your specific data processing activities. However, there are sections that you can find in every privacy notice:

• The personal data collected (e.g., names, email addresses, payment information.).
• How you collect this data (e.g., forms, online purchases, invoices, quotes).
• The purpose of the collection (e.g., marketing activities, processing orders, analytics).
• Any third party involved in the collection or processing.
• The technical measures in place to protect the data.
• User rights.
• How to contact your business.

To have an idea of how a privacy policy for a small business would look like, take a look at this handy template.

2. Cookie policy

The cookie policy is the legal document that explains to your users how your website uses cookies. Today, almost every website uses cookies. They can have many purposes: provide enhanced functionality to your website, help you with performance tracking, or monetize your content.

A cookie policy can be a specific section of your privacy policy, or a standalone document and it usually includes:

• the types of cookies that you install;
• all the third parties that may install cookies via your site or app and a link to their cookie policies;
• the purposes for which cookies are used.

Pro tip: Terms and Conditions

Terms and Conditions are not related to the GDPR, but they can be a useful document to have. Terms and Conditions are a contract between you and your users, setting out the conditions to use your content, services, or goods. In particular, they can help you protect you and your business from potential liabilities and prevent problems in the first place. They are not always mandatory, but recommended if your site handles complex scenarios, such as user accounts or online purchases.

In the case of e-commerce, they are actually mandatory, because they define the conditions of sale and include all the information that is required by law, such as details about warranties, right of withdrawal, payments and shipping.

Don’t forget cookie requirements!

Cookies are regulated by the ePrivacy Directive – also called Cookie Law. This directive aims at regulating electronic privacy in general, so its scope is pretty wide (cookies, email marketing, SMS services, etc.).

When it comes to cookies, here’s what you need to do to comply with the Cookie Law:

• Display a cookie banner when users first visit your site. The banner must inform them of your use of cookies and ask for their consent before installing tracking cookies on their devices. We specify tracking cookies because strictly necessary cookies do not require consent.
• Have a cookie policy that users can access at any time. Remember to add a link to your cookie policy in the cookie banner.
• Block cookies that are not strictly necessary for the operation of your site, both before they give their consent and when they refuse consent.
  

Record the consents you collect

As we said above, consent is one of the legal bases of the GDPR. However, you need to be able to prove that you obtained the consent lawfully.

To be valid, consent under the GDPR should be freely given, specific, informed, and unambiguous. That’s why you need to allow an explicit “opt-in” action from users and should not use pre-ticked boxes in your forms.

Then, each time you get a new consent you need to record it. This is key to your compliance, because a clear record of consent can help you prove that your processing activity is indeed compliant.

Remember to include the time and date of consent, the preferences expressed by the user, and the legal documents that the user accepted at the time of consent.

Honor user rights

One of the main goals of the GDPR is to give users more control over their data. The GDPR gives users several rights that they can exercise at any time, and that you should always respect.

Users have the right to access the personal data you hold about them, request that their data be corrected or deleted, and withdraw their consent to certain processing. They also have the right to their data portability and to restrict processing.

Your privacy policy should explain how users can send their requests to you, and when you receive a request, you should make sure to respond promptly – usually, no later than one month.

Create a plan for data breaches

According to Statista, more than eight million records were exposed in data breaches worldwide in the last few months of 2023. That’s a huge and frightening number, and that’s why you should do your best to protect your and your users’ data.

First of all, your website should be secure and hard to hack:

• Get an SSL certificate and make sure you have an HTTPS navigation.
• Choose passwords that are hard to guess and do not reuse them.
• Use Two-factor authentication (2FA).
• Use encryption when storing data.
• Remember to update your software regularly.

Unfortunately, even if you do everything right, you can’t expect to be immune to security breaches. Hackers get better every day. For this reason, you should also have a data breach response plan in place. This will help you monitor for potential vulnerabilities, but also report to the authorities and affected individuals in the event of a breach. The GDPR defines a 72-hour period to notify your Supervisory Authority, which starts from the moment you become aware of the breach.

What are the risks of non-compliance?

We know it’s a lot, but remember that failure to comply with GDPR can put your small business at serious risk. Penalties include official reprimands, data protection audits, and huge fines.

GDPR fines can be as high as €20 million or 4% of annual revenue, whichever is greater. And even though you may not be hit with a maximum fine, a smaller amount could still have a big impact on your operations.

In addition, under the GDPR, users have the right to seek compensation for damages if their data has not been processed in accordance with the law.

Wrap up

As you can see, GDPR compliance for a small business is a complex process. It requires careful consideration and the requirements may vary, depending on your business. We’ve tried to give you a general overview to get you started, but we recommend that you don’t do this on your own. Either consult a legal professional or choose a tool that can make your compliance process much easier!

As a small business or a freelancer, you shouldn’t overlook GDPR compliance. In fact, in a world where privacy is becoming increasingly important, compliance can be used as a competitive advantage. A company that cares about its customers’ data and is transparent about its activities is also a company that can be trusted.