Running a business online has made it simpler than ever to serve an international market. However, selling products and services internationally online comes with a host of considerations related to:

  • where your business is set-up;
  • what your agreements set out; and 
  • how disputes get resolved. 

What you will have to consider when selling internationally will ultimately be determined by:

  • where your business is legally set up;
  • where your customers and clients are located; and
  • your business’ terms and conditions.

Where Is Your Business Legally Set Up?

Having companies incorporated in several countries (known as dual structures) can affect your rights and responsibilities. Legally, this means that you are subject to the regulations applicable in your business’ host country. Having an Australian company structure:

  • helps you plan for growth; and
  • mitigates your risk of personal liability from creditors.

If your business is based in Australia, all transactions between you and a buyer will imply that you are subject to Australian laws. This may change your rights and obligations with regard to selling certain products abroad for a range of reasons. 

For example, the diplomatic and business relationship between Australia and the country in which you are selling may affect how you run your business.

In an online business, your website and digital presence will be the international face of your business. Therefore, it is important to ensure that your website:

  • is effective at marketing your products;
  • complies with local data privacy laws; and 
  • uses branding and content which is protected by trade marks and copyright.

Where Are Your Customers and Clients?

The legal considerations of selling internationally will also depend on where your customers are based. Where your targeted customers are based will affect:

  • what you can sell; 
  • the regulations with which you will need to comply; and 
  • your sales channel and dispute resolution mechanisms.

Foreign Regulatory Regimes

Where you plan to sell will affect the regulations your business will face. If you intentionally target a market segment in Europe, for example, you will likely need to comply with the European Union’s GDPR laws. Similarly, targeting an international market may also subject you to that market’s regulatory frameworks. 

For example, in the United States (US), your products may not pass the scrutiny of its federal agencies, such as:

  • US Customs and Border Protection; 
  • the Environmental Protection Agency; or 
  • the Consumer Products Safety Commission, among others. 

Conversely, if you do not intentionally target a particular country’s market, it is sometimes possible for customers in that market to purchase your products internationally without you having to consider the regulatory regime of their country. In order to determine whether and to what extent you might be able to sell your products in a given country, it is important to seek legal advice for each respective jurisdiction you wish to operate in.

Who Are Your Customers and Clients?

Whether you are subject to certain foreign countries’ regulations may also depend on who your customers and clients are. 

For example, it is only possible to import Australian wine into the US through a licensed importer. Wine distribution is further limited in the US at a state level. Therefore, if you run an online wine business, you cannot sell directly to individuals. 

Consider if your category of product or service could be differently regulated depending on whom you are selling to.

Intellectual Property

If you are selling abroad at scale, it may be wise to consider protecting your brand name and logo in all the countries you wish to operate in. Your logo and name are among the most crucial components of your brand, as they help customers associate their buying experience with your business. Even if you have an Australian trade mark, it is best to consider registering trade marks in the countries you intend to operate in.

Australian copyright protection is automatic. However, this is not the case in some foreign countries, such as the United States. If you have ambitious growth plans, it is best to be on the safe side and protect all aspects of your intellectual property.

Practical Considerations

When selling online, you will need to consider how you will process payments. Selling online in Australia is relatively straightforward. You can use a third-party payment service provider, such as Stripe, to process payments in Australian dollars and deposit them into an Australian (usually business) bank account.

However, when selling internationally, you will be processing payments in foreign currencies, and will need to consider how and if you will ultimately convert them into Australian dollars. Some banks run foreign currency accounts which can hold payments received in US Dollars, for example. Similarly, payment service providers like Stripe can also manage currency conversion. It is necessary to research a payment processing solution that works best for you, especially if you intend to process payments in foreign currencies.

What Do Your Terms and Conditions Say?

All online businesses should have business terms and conditions. This document will set out your business policies on terms such as returns, shipping, and dispute resolution. The right type of business terms and conditions take your business’ unique circumstances into consideration, including: 

  • who your customers are; 
  • where they are based; and 
  • what product or service you will provide.

When selling online internationally, you should consider whether a return and shipping policy that is suitable for Australian customers would be commercially viable for your international customers as well. 

For example, it may be affordable for you to accept local returns and pay for shipping Australia-wide, but you would not want to be stuck with an international shipping bill for a product being shipped to or from the US.

Your terms and conditions should dictate how you will resolve disputes between your business and the other party to the contract. Different countries have different laws and regulations. You will want dispute resolution to take place where resolution is most convenient for you. You will also want to ensure that your business’ rights are enforceable within the regulatory framework that you will be operating under. Since you and your business are based in Australia, it would be best for you to resolve any disputes with your business in Australian courts and according to Australian laws. This prevents the possibility that you will have to engage with foreign courts or understand complicated foreign regulation.

Taxes

Among the other considerations when selling internationally, your products or services may be subject to taxes, tariffs, customs and other fees. These considerations depend on the particular markets you serve and the distribution channels you use. It is important to plan how you will serve a foreign market with a tax professional in order to understand the true commercial implications of selling internationally.

Key Takeaways

Starting an online business is an excellent way to get exposure to broad international markets. It also requires significantly less upfront investment than setting up a foreign subsidiary or branch. Remember that just because your intellectual property is protected in Australia, it may not be protected abroad. When targeting an international market online, be aware that your product or service is subject to foreign regulations. You will want to ensure that the terms and conditions of your international transactions work for your business. If you need help understanding the legal implications of selling internationally from your Australian online business, contact LegalVision’s e-commerce lawyers on 1300 544 755 or fill out the form on this page.

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