Important Legal Considerations to Be Aware of When Starting an eCommerce Business

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Important Legal Considerations to Be Aware of When Starting an eCommerce Business

If you’re ready to run with your business idea and start your own eCommerce business, you must do your research and manage all essentials associated with entrepreneurship. With everything being online these days, it’s not surprising that many legal matters can also be dealt with online.

It’s also worth mentioning that your state will help you as much as possible in these trying times. For instance, business owners can now use online notary California services to manage their legal documents remotely. Some states like Texas, Washington, Florida, etc., even offer actual notarization online. That said, don’t hesitate to check how your state can help you when it comes to the legal matters of starting an eCommerce business.

However, as a budding entrepreneur, you have to be aware of legal requirements and considerations to start and run your small business successfully.

Choose a legal business name and register it.

Many business owners who are just starting try to save as much money as possible. However, ignoring the legal matters when it comes to your business name to save a couple of hundred dollars can end up costing you thousands later on.

Essentially, a Google search is not enough to choose your business name. First, you have to find a legally unique one. And that’s not all. Once you’re set on a name, you must register your trademark.

Trademark infringement can impede your business growth, force you to rebrand, and lose valuable capital. Therefore, make sure to invest in registering your trademark from the get-go, and do so in every country you plan to do business with.

Set up a business structure

To correctly manage your taxes, you need to choose a proper structure for your business. Of course, it’s highly recommended to seek professional advice from tax specialists, accountants, and attorneys in this case. But, in general, most small businesses benefit the most from choosing an LLC or Corporation as their legal structure. Incorporating small businesses comes with plenty of advantages and flexibility in terms of taxes instead of a sole proprietorship.

Always set aside the amount of money you as a business owner need to pay taxes, thus avoiding taxation issues as you climb the ladders of corporate success. This essentially includes the tax from your actual earnings and the sales tax from every purchase. But, of course, it’s also possible to pass the latter to the customers.

Obtain the necessary business licenses

Depending on the city and state you live in, and where your business will be, you’ll need to get adequate business licenses. Many people looking to start a business online may think they won’t need to deal with this, but these licenses are a must even without physical locations!

Let’s take California as an example again – the same rules in this US state apply to regular and online businesses. That said, you’d need to obtain a General Business License and a California Seller’s Permit. So again, this is another instance where talking to a local attorney would be most beneficial.

Get the “safe harbor” protection.

You never know what could be posted on your website. Sometimes, users might post something that neither you nor they have copyright for. And this unfortunate occurrence can make your business liable for copyright infringement.

Fortunately, there’s a very quick and easy way to prevent this from happening. First, register your eCommerce business on the US Copyright website for safe harbor protection. Still, before you launch your business website, make sure to double-check all content on it so there’s nothing that could potentially be a cause for copyright infringement.

Have your Terms of Use and privacy policy

It may seem that all Terms of Use are the same for every eCommerce business, which could easily tempt you to borrow some of the languages from other websites for your Terms of Use narrative. However, this is not the best idea if you want to make sure that everything you describe and talk about is perfectly unique to your business operations and the products/services you sell.

And just like it’s essential to have your Terms of Use, it’s equally so when it comes to the privacy policy. The privacy policy deals with how data is handled, secured, and used, which is essential for protecting business website owners from legal liability in the unfortunate case of a data breach.

Open a separate business bank account.

Even if you, as a business owner, are also the only employee of your eCommerce business, you should still separate your finances from the business ones. But, of course, if you plan to incorporate your business from the start, this will be a legal requirement as well.

However, there are other important advantages to consider from having a separate business bank account. Tax time will be considerably easier for starters when you have a separate account to track your earnings. Secondly, in case of legal business trouble, you’ll be able to protect your assets better. And finally, this will tell the IRS that your eCommerce store is an actual business rather than a hobby.

Starting an eCommerce business may indeed be an easier type of entrepreneurship, but that doesn’t mean you’ll be exempt from all the legal requirements. Therefore, it would be best to inform yourself about everything about owning and running an eCommerce business and meet with a good attorney beforehand. 

Important Legal Considerations to Be Aware of When Starting an eCommerce Business