Paul Simon may have sung about the days of miracle and wonder in 1986, but that was before online shopping. Online shopping is definitively changing the face of retail. And that is inspiring many aspiring online retailers.  If you would like to open an online shop but are unsure about what legal issues you need to consider beforehand, this article discusses how to open an online shop.

Business Structure

Even though your business might operate online, it still requires structuring in terms of the business operations.  You need to think carefully at the outset about the correct structure for you as this will affect how it will run and your obligations as a business. While you will likely favour the company structure, you still need to do your due diligence on the different types of structures. And if you do choose to incorporate, you will need to know what type of company is right for you. You must then register with the Australian Securities and Investment Commission and obtain an ACN. You will need an Australian Business Number.

Finance Matters

Although the cost of starting a business online has fallen considerably since the first days of online shops, you will still need adequate finance. After all, an online store remains a shop and shops have costs, especially in the beginning.

Research the business loan market and speak with any products offering products that you feel would suit you. Ask questions. You have to know your obligations and rights under the loan. More personally, you must feel confident that you can service the loan. This last point might be difficult to work out on your own. If it is, consider speaking with a business advisor.

It is a good idea to have a lawyer read over your loan documentation. They can then explain it to you clearly and simply.  Remember that they are wholly independent of the bank and will act in your best interests.

Legal Considerations When You Open an Online Shop

Of course, the fact that your shop is online requires you to consider things that a café owner might not.

For example, you will need to register your domain name and your business name. You might also consider putting a trade mark on your name. While you might be tech savvy and feel that you can handle registering a domain name and business name, professional advice about a trademark is essential. A lawyer skilled in this area of law has information and experience that common knowledge cannot rival.

Be aware that if you plan on selling products that require a licence in the physical retail environment, you will need one as well. Selling online does not change the public interest considerations owing to which some products require a license.  For example, online retailers of wine and alcohol must apply for and hold a Liquor Licence. Certainly, the type of licence they need is different to the licences held by bottle shops. Nonetheless, these online retailers have permits with attendant restrictions and obligation.

Your site will need adequate safeguards so that customer information, especially credit card details, remains confidential. That helps prevent identity theft and fraud and will build your goodwill and reputation as customers gain confidence in your site.

The question of how you put together your online store is not legal. But it is important to consider. Perhaps the best advice is to make sure that your website reflects your product. The Sydney Morning Herald expresses it best: ‘A site selling $500 handbags has to look smart’.

Taxation

As a business, you must pay both Income Tax and Goods and Services Tax. Your business must have a Tax File Number and will need to register for GST purposes.

All of which means that you will have reporting obligations – filing tax returns and completing BAS Statements at a minimum. You will need a good accounting system and practices in place so that your business records are accurate and transparent.

If you are uncertain about taxation procedures and requirements, the website for the Australian Taxation Office is an excellent general resource.

Consumer Law

As an online shop, you have obligations under the Australian Consumer Law (ACL).  You must meet all the consumer guarantees and provide remedies where appropriate.

If you are unclear about the guarantees, visit the website for the Australian Competition and Consumer Commission for general information. Ignorance of the consumer law never excuses a breach of it.

As an online shop, you must be sure not to pull your customers into the subscription trap. These traps are an emerging issue worldwide, and consumer advocates view such measures very unfavourably. The salient point is to make all information clear and transparent to your customers so that their purchasing decisions can be informed.

Employers

Whether you have four employees or four hundred, your online shop makes you an employer. You must pay your staff appropriately so be clear about any relevant awards or employee entitlements.  You must also make timely superannuation contributions.

As your workplace must be safe and your employees able to work without harassment and bullying, make sure you have appropriate human resources policies put in place. If in doubt, speak with a lawyer.

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Questions about opening your online shop? Get in touch on 1300 544 755.

 

Carole Hemingway

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