In Short
- Choose a unique business name and check for trade marks.
- You may need an ABN if you operate as a business and hit a revenue threshold.
- Understand your responsibilities under Australian Consumer Law, including warranties and tax.
Tips for Businesses
Before starting an Etsy store, ensure your business name is unique and properly registered. If you expect to make over $75,000 annually, obtain an ABN. Also, be mindful of consumer law protections, including product warranties and tax obligations. Accurate product images and proper copyright use are essential to avoid potential legal issues
Founded in 2005, Etsy is an online marketplace that allows community members to broadcast their creativity and sell unique arts and crafts or vintage goods online. Now worth $23.85 billion with over 25 million users, Etsy is one of the largest and fastest-growing platforms available to consumers today. This article will provide five quick tips to consider before you open your Etsy store or sell products online.
1. Consider a Business Name
Deciding on a business name can be much more complicated than you think. So, where is a good place to start? We recommend starting by asking yourself two questions:
- has someone already trade marked my proposed business name?; and
- will I be able to register the business name?
Note the differences between a trade mark and a business name. When you trade under a different name, you must register your business name with the Australian Securities and Investments Commission (ASIC). To register your business name, search the Australian Business Register (ABR) and see whether the name you want is available. The ABR will not approve your business name if an identical or similar name is already registered. Hence, be sure to do your research before applying.
A trade mark over your business name is an entirely different process. IP Australia is the body that governs intellectual property rights, including trade marks. You can check whether or not your proposed name is trade marked on IP Australia’s search system, ATMOSS. Your next step is to register your trade mark. A registered trade mark adds extra protection to your business name by preventing others from using and selling under your brand name.
When applying for a trade mark for your business name, it is best to engage a trade mark lawyer. Seeking specialist advice can help you avoid the costs of making errors in your trade mark application.
2. Consider Whether You Need an ABN
In Australia, you require an Australian Business Number (ABN) if you:
- are an enterprise in Australia;
- have an intention to make a profit; and
- can demonstrate that you have a business structure in place.
Once you obtain an ABN, you will receive certain benefits, including reclaiming goods and services tax and using the PAYG tax system. Additionally, following government regulations, you must register your business for GST with the Australian Taxation Office. There may be other tax responsibilities of a small business that you should note.
Continue reading this article below the form3. Have Caution When Taking Images
All the images you see online receive protection under automatic copyright laws in Australia. This includes images you find on Google. Hence, if you want to use images to display the products you sell, you must get permission from the copyright owner. This is known as a copyright licence.
Additionally, some websites provide images that are already in the public domain. As such, you can use these images without permission. If unsure whether you can use the image, it is best to check with the owner or the domain first. It is also essential that the picture you are using product listings you are selling. If the buyer receives an item that is different to the image, you may need to provide refunds to customers.
4. Understanding Intellectual Property Rights on Etsy
As an Etsy seller, it is crucial to understand and respect intellectual property (IP) rights. This includes protecting your creations and ensuring you do not infringe on others’ rights. Your original designs, artwork, and product descriptions are automatically protected by copyright. Consider trademark registration if you have developed a unique brand name or logo. This can prevent others from using similar marks that might confuse potential customers.
For truly novel inventions, you may want to explore patent protection. Consult with a patent attorney to determine if your product qualifies. Ensure you have proper licensing agreements if you are using licensed characters or designs (e.g., Disney characters). Selling unlicensed merchandise can lead to legal issues and suspension of Etsy accounts.
Etsy provides a reporting system if you believe someone infringes on your IP rights. Conversely, if you receive an infringement notice, address it promptly to avoid account penalties. Remember, IP law can be complex. If you are unsure about your rights or obligations, it is advisable to consult with an IP lawyer to ensure you are operating within legal boundaries and protecting your creative assets effectively.
5. Consider Warranties & Guarantees
It is important to note that Etsy’s terms and conditions do not cover customers for any misrepresentations regarding product quality, safety or legality. Likewise, Etsy also does not guarantee that there are no defects or they will correct errors. This rests entirely with the seller (i.e. you).
Under Australian Consumer Law, consumers who purchase from a business have protection under consumer guarantees. If you run your Etsy store as a business, consumer guarantees will likely apply to your goods. Practically, your business should guarantee that your products (among other things):
- are of acceptable quality;
- are produced with due care and skill; and
- match the advertised description.
You may be a private seller if you are not operating your Etsy store as a business. Likewise, the Australian Consumer Law may not apply. As such, you are solely responsible for the items you sell and must comply with Etsy’s policies and Australian law.
Familiarise yourself with Etsy’s Handmade Policy and list of prohibited items. Ensure your products meet all relevant safety standards, especially for categories like children’s items. Remember, Etsy does not inspect items sold through its Services, so product safety is your responsibility.
While Etsy provides a case system for buyer-seller disputes, it is important to note that Etsy has no obligation to resolve or assist in resolving any disputes. You are ultimately responsible for addressing issues with buyers in line with Australian consumer law and Etsy’s policies.
You can minimise legal risks by aligning your store policies with both Etsy’s requirements and Australian law. However, be aware that you are responsible for understanding and complying with all applicable laws and Etsy policies. This includes obtaining any necessary permits or licences, meeting legal requirements in your jurisdiction, and handling any tax obligations related to your sales.
6. Consider Tax Responsibilities
In Etsy’s terms and conditions, sellers are responsible for paying any tax on their sales. This means that if you need to pay taxes, you should adjust the price of your products yourself to cover the cost of tax payments.
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Key Takeaways
Turning your creative passion into a business can be a deeply rewarding experience. As an online marketplace, Etsy might be the ideal platform to open up your Etsy store. However, there are some things to note, including:
- choosing a unique business name;
- applying for an ABN;
- respecting copyright on images;
- respecting Australian consumer laws; and
- considering tax responsibilities.
If you need assistance setting up your own Etsy store or selling products online, our experienced online business and eCommerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A business name is one you register with ASIC, especially if you trade under a name that is different to your own. A trade mark is a form of protection you can apply to several elements of your business, like its name, logo or slogan. With a registered trade mark, you can prevent others from misusing your business name.
Under Australian Consumer Law, consumers who purchase from a business have protection under consumer guarantees. Practically, your business should guarantee that your products are of acceptable quality and match your advertised description. Also, there is a guarantee that you will produce your goods with due care and skill.
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