AI is becoming part of how small businesses work. People are using ChatGPT to write emails and customer proposals. Teams are using AI tools to generate images, write code, and analyze data. Managers are experimenting with AI to automate routine tasks. It's happening informally, often without formal guidance from leadership.
But AI creates real risks. If an employee puts customer data or financial information into a public AI tool, that data is now in the AI system's training pipeline. If someone uses an AI-generated answer without reviewing it, you might send inaccurate information to a client or make a decision based on flawed analysis. If multiple people are using different AI tools, you have visibility and security gaps. If a contractor uses an AI tool that violates copyright, your company could have liability.
These problems aren't theoretical. We're seeing small businesses struggle with AI governance issues monthly. The good news: a simple, practical AI policy prevents most of these problems. This guide includes a template policy you can adapt for your business, plus guidance on what to cover and why.
Why Every Business Using AI Needs a Written Policy
Some business leaders assume they only need an AI policy once the company is large enough to have a formal compliance program. That's backwards. Small businesses need AI policies sooner than enterprises do, because you don't have dedicated security, legal, or compliance teams to catch problems informally.
A written policy does several things:
Protects Data: A policy tells employees what data they can and cannot share with AI tools. It prevents someone from pasting customer lists, financial data, or proprietary code into ChatGPT.
Ensures Quality: A policy requires that AI outputs be reviewed before they're used. This prevents bad information from reaching customers or decisions being made based on flawed analysis.
Manages Liability: A policy establishes rules about copyright and plagiarism. It makes clear that employees are responsible for verifying AI output before using it, which limits your company's liability if something goes wrong.
Creates Visibility: A policy requiring that employees report which AI tools they're using gives you visibility into which tools are in your environment and what risks they pose.
Provides Clear Guidance: Instead of employees guessing about what's okay and what isn't, a policy makes expectations explicit. "You can use ChatGPT for brainstorming; you cannot paste customer data into ChatGPT." Clear rules reduce confusion and risk.
What an AI Acceptable Use Policy Should Cover
Not every policy section applies equally to every business. A healthcare company's AI policy will emphasize patient data protection. A software company's policy will emphasize intellectual property. But all policies should address these core areas:
Scope and Purpose: Who does the policy apply to? Employees? Contractors? Consultants? What is the policy's purpose? To protect company data? To ensure quality? To manage legal risk? Be explicit.
Approved Tools and Platforms: Which AI tools are employees allowed to use? ChatGPT? Gemini? Company-approved tools? What about tools that aren't specifically approved? Is it "ask first" or "not allowed"? Some companies take a whitelist approach (you can only use these tools). Others take a risk-based approach (you can use any tool as long as you follow these rules).
Data Classification and Handling: This is the most critical section for data protection. Classify your data by sensitivity: public, internal, confidential, restricted. Then specify which data can be shared with external AI tools. Generally: public data is fine, internal data should be avoided, and confidential or restricted data is prohibited. Make clear what "sharing" means: pasting into a tool, uploading a file, asking a chatbot about it.
Output Review and Accuracy: AI tools generate plausible-sounding but sometimes inaccurate content. Your policy should require that any AI output used in business decisions or customer-facing materials be reviewed for accuracy by a human. Someone from your company is responsible for verifying that the AI output is correct before it's used.
Employee Responsibilities: What are employees expected to do? Disclose which tools they're using? Report any security incidents? Complete training? Ask permission for certain uses? Be specific about expectations.
Prohibited Uses: What is explicitly not allowed? Creating tools that compete with your company? Sharing confidential information? Using AI to make hiring or firing decisions without human review? Using AI to generate misinformation? List the most important prohibitions for your business.
Incident Reporting and Updates: What should an employee do if they accidentally share sensitive data with an AI tool? If they discover a security breach? If they find an AI tool isn't doing what it claims? How will the policy be updated as new tools and risks emerge?
AI Acceptable Use Policy Template
Below is a template you can customize for your business. Replace bracketed sections [like this] with information specific to your company.
TEMPLATE: AI ACCEPTABLE USE POLICY FOR [COMPANY NAME]
Purpose: This policy guides the appropriate use of artificial intelligence (AI) and AI-powered tools at [Company Name]. The policy aims to foster innovation and efficiency while protecting company data, ensuring accuracy, and managing legal and operational risks.
Scope: This policy applies to all employees, contractors, and consultants of [Company Name]. It covers any use of AI tools, whether company-provided or personal, during work hours or for work purposes.
1. APPROVED AI TOOLS AND PLATFORMS
[Company Name] approves the following AI tools for business use:
- [List company-approved tools: e.g., ChatGPT (GPT-4), Microsoft Copilot, Gemini Pro, etc.]
- Other tools may be used if they comply with all sections of this policy
- Before adopting a new AI tool, consult with [IT Manager / Compliance / Security team]
2. DATA CLASSIFICATION AND HANDLING RULES
All company data is classified into one of four categories:
- Public: Information that has been publicly released or is not sensitive (marketing materials, published research, general company information)
- Internal: Non-sensitive business information not intended for public release (internal processes, organizational structures, general business plans)
- Confidential: Sensitive business information that could harm the company if disclosed (customer lists, financial data, pricing, unreleased products, trade secrets)
- Restricted: The most sensitive data requiring protection by law or contract (customer personal information, payment data, health records, social security numbers)
Allowable Uses by Data Classification:
- Public data: May be shared with external AI tools
- Internal data: Use company-approved, internal-only AI tools (not public-facing tools)
- Confidential data: Do not share with external AI tools; use only internal tools if your company has them
- Restricted data: Strictly prohibited from sharing with any external AI tool. Do not paste, upload, or mention specific restricted data to AI tools
3. APPROVED USE CASES
AI tools are approved for these categories of work:
- Brainstorming and ideation (with no confidential information)
- Writing assistance and editing (with human review)
- Content summarization of public information
- Code generation (with security and functionality review)
- Data analysis and visualization (using non-confidential data)
- Customer support and FAQ assistance (using company-approved information)
- Research on public topics
- Documentation and technical writing assistance
4. OUTPUT REVIEW AND ACCURACY REQUIREMENTS
All AI-generated content used for business purposes must be reviewed by a qualified employee before use. The reviewer is responsible for:
- Verifying factual accuracy (checking facts against reliable sources)
- Ensuring the output aligns with company messaging and policies
- Confirming no confidential information was inadvertently generated
- Testing code for security vulnerabilities and correctness
- Making any necessary edits for clarity and tone
- Adding attribution if the AI tool is used to assist with customer-facing content
AI-generated content cannot be used in customer communications, contracts, financial documents, or any public-facing material without documented human review and sign-off.
5. EMPLOYEE RESPONSIBILITIES
Every employee using AI tools is responsible for:
- Complying with all data classification rules (never sharing confidential or restricted data)
- Reviewing all AI outputs for accuracy before use
- Being transparent about AI use in any deliverable or communication (disclosing when AI was used to assist)
- Reporting any security incidents, data breaches, or unexpected behavior to [IT Manager / Security team] immediately
- Completing [AI training / compliance training] by [date]
- Asking for clarification if unsure whether a use case is allowed
6. PROHIBITED USES
The following uses of AI tools are strictly prohibited:
- Sharing customer personal data, payment information, or protected health information with any external AI tool
- Sharing employee personal data (social security numbers, performance reviews, salary information)
- Sharing proprietary code, product specifications, or unreleased product information with external tools
- Using AI to generate misleading, fraudulent, or deceptive content
- Using AI to circumvent security controls or create unauthorized access
- Using AI to make employment decisions (hiring, firing, promotion) without human review and judgment
- Using AI tools that require you to violate intellectual property rights or third-party terms of service
- Using AI to generate content that harasses, discriminates, or demeans employees or customers
- Using any unapproved AI tool for confidential or restricted data
7. INTELLECTUAL PROPERTY AND COPYRIGHT
Be aware of copyright and intellectual property considerations:
- AI-generated content may be based on copyrighted material. You are responsible for ensuring compliance with copyright law.
- If you use AI-generated content in customer-facing materials, verify that it is original and does not infringe on third-party IP
- Content generated with AI and used in [Company Name] work products is considered company property
- When in doubt about IP implications, consult with [Legal / Management] before using AI-generated content
8. INCIDENT REPORTING
If you accidentally share confidential data with an AI tool, discover a security issue, or suspect misuse, report it immediately to [IT Manager / Security team] by:
- Email: [contact information]
- Phone: [contact information]
- In-person: [location/person]
Provide details about what happened, what data may have been affected, and when you discovered it. Reporting incidents promptly helps us mitigate risk and improve policies.
9. POLICY UPDATES AND REVIEW
This policy will be reviewed and updated [quarterly / semi-annually / annually] or as needed in response to new tools, risks, or regulations. All employees will be notified of updates.
10. ACKNOWLEDGMENT
All employees must acknowledge receipt of and agreement with this policy. Acknowledgment will be documented in [HR system / training platform / email].
How to Roll Out Your AI Policy
A policy only works if people know about it and understand it. Here's how to introduce it effectively:
Communicate the Why: Don't just announce a new policy. Explain why it matters. Talk about the real risks (data breaches, IP violations, accuracy issues) and how the policy protects the company and employees.
Deliver Training: Offer a brief training session (30 minutes is enough) covering policy highlights, the data classification system, and what to do if you're unsure about a use case. Make it interactive so people can ask questions.
Get Sign-Off: Have all employees sign or electronically acknowledge the policy. This ensures everyone has understood it.
Start with Awareness, Not Enforcement: In the first month, focus on awareness and clarification. Answer questions. Help people understand what data classification means for their work. Don't immediately penalize honest mistakes. Once people understand the policy, then move to consistent enforcement.
Review and Iterate: After 30 days, gather feedback. Did people find the policy clear? Are there common questions or confusion points? Update the policy based on real-world feedback.
Make Champions: Identify employees who are comfortable with AI and want to help others. Make them go-to resources for questions about policy and best practices.
Customizing This Template for Your Business
The template above is a starting point. You'll want to customize it based on your business:
If you handle healthcare data, emphasize patient data protection and HIPAA compliance. If you're a professional services firm, emphasize confidentiality and IP. If you're a software company, focus on code security and trade secret protection. If you work with sensitive customer data, emphasize restricted data handling.
Also consider your company's AI maturity and culture. If most employees are already using AI tools informally, you might lead with "here's how to use AI safely" rather than "here's what's not allowed." If you're earlier in adoption, you might start with a shorter, simpler policy and expand it over time.
Common Questions About AI Policy
Q: Should we ban AI entirely? Most small businesses shouldn't. AI tools can genuinely improve productivity. The goal is safe, appropriate use, not prohibition.
Q: What if we don't have the infrastructure for internal-only AI tools? That's okay. You can still use external tools safely as long as you follow data classification rules—public and internal data only, no confidential or restricted data.
Q: Do we need legal review of this policy? For most small businesses, no. This template is practical and reasonable. If you're in a heavily regulated industry (healthcare, finance, law) or if you're concerned about specific liability, consider having a lawyer review it.
Q: How do we handle vendors and contractors? The policy applies to anyone working with your company. Make it a requirement in vendor agreements and contractor agreements that they comply with your AI policy if they're using AI on your behalf.
Your AI Governance Journey
An AI acceptable use policy is a foundation, not a complete solution. As your company uses more AI, you may eventually want more sophisticated governance—tools to monitor AI usage, formal vendor evaluation processes, or compliance audits. But for now, a clear, practical policy that you actually use and enforce is more valuable than a lengthy policy document that sits in a drawer.
If you need help developing, rolling out, or refining an AI policy for your business, 312 IT Consulting offers AI governance and training support. We can help you customize a policy, train your team, and establish processes that actually work for your business. Let's discuss your AI governance needs.