The number of online business and eCommerce platforms has been increasing at an incredible rate over recent years and has proven to be a great way for entrepreneurs and creative individuals to earn money. Online businesses have provided opportunities to connect businesses and individuals in a virtual ecosystem where everything happens in real-time. The rapid growth of the online business has stimulated countless debates about regulations and consequently, more emphasis has been put in developing legal frameworks to regulate the various online industries.
Whether you are completely new to the online business world or you are already well established, it is important to understand the regulations and restrictions that can potentially affect your business.
In this article, we will highlight some of the legal factors that will affect your business.
1. Tax Laws
One misconception that many people who are looking to get into online business have, is that it is a tax-free industry. Whilst there are certainly many freelancers who do not declare their earnings, registered online business is subject to many tax laws in much the same way as a traditional business. As you will often be dealing internationally with customers and clients, the tax laws can be very complicated as different standards and rules are applied in different states, regions, and countries. Make sure that you do your research about your target market carefully to thoroughly understand your suppliers and customers and the tax laws in their locations.
Business tax law can be extremely complex at the best of times, but for online businesses, they are particularly complicated. It can be a big benefit to an online company to bring in a team of specialized legal practitioners and accountants to help ensure that you don’t run into any problems buying, selling, and shipping internationally. All of these can be a minefield of potential legal problems so if you want to avoid the issues that many online business owners find themselves facing, talk to an accountant or a specialized lawyer who deals with tax laws specific to online businesses.
Shipping is a huge part of many online businesses but there is a range of shipping rules and regulations that you must adhere to. Whether you use a delivery service or your shippers, restricted and regulated items are not to be taken lightly. Depending on the country of origin and destination, these items may include alcohol, animals, hazardous materials, chemicals, tobacco, and organic products. It may be that you need to pay extra fees, fill out additional paperwork, or ensure that the items have been inspected so that they meet the legal standard. Never try to sneak around these rules as the legal consequences for both your business and for yourself can be very serious.
3. Inventory Regulations
Prohibitions on stocking large quantities of particular goods are very common, and so checking zoning codes, along with the terms of your lease or property deeds will help you make the best decisions for your business. Making sure warehousing is not prohibited in your place of business will prevent you from being fined or incurring any additional costs whilst smart negotiations for the best supplier possible will also be in your favor. Having an effective & organized inventory management strategy will ensure that you do not inadvertently break any rules or regulations and sustain your supply routes.
4. Trademarks, Patents & Copyrights
The laws protecting intellectual and commercial rights are very strict in the majority of countries in the world. A clear understanding of these terms will help to give you an idea of what to apply for depending on the products that you want to sell. Trademarks help to differentiate products from others; patents offer protection against copies for a certain amount of time, while copyrights are associated with works of art literature and music.
Permissions or licenses to sell specific products may be required in certain places, so keep that in mind and make sure to check before doing business in new markets.
5. Terms & Conditions
The purpose of the terms and conditions is to help both you and your customers, so they require due care and consideration. Start off with the fundamentals like contact information, products and services offered, and identity clarification so that your customers can trust in what they are looking at. Then add other complex terms and policies afterward. Research can help a lot in this aspect of the business, and hiring a business lawyer to help write up your terms will make all the difference and ensure that no mistakes are made.
Online business is fundamentally no different from any other business and laws, rules and regulations exist to protect everyone from the consumer, to the retailer and the manufacturer. Whilst many online businesses try to get around paying taxes, the consequences can be very serious so it is always important to make sure you know exactly what taxes you are supposed to be paying and don’t try to cheat the system. If in doubt, investing in an experienced business lawyer and an accountant who specializes in online business will help to iron out any problems.