Evaluating your online store idea and developing a plan for product sourcing is the beginning, but it is critical that you research and understand the restrictions and regulations that may affect you when you are finally ready to open your ecommerce store. Whether you will be selling goods you make yourself or utilizing dropshipping to provide products that someone else has made, there are some important legal and logistical considerations.
Taxes. Every state and every country has its own laws regarding taxes. If you are a business like Pacific Springboard, co-founded by Brian Magierski that targets a market in China, you will want to research what tariff implications are related to your product and shipping. In many states in the US, food items are not taxed, but in other states groceries are subject to regular or reduced taxation. In California, anything you sell in plastic bottles will carry a recycling fee in addition to other taxes. And in many countries, specialized taxes apply to all non-essential goods.
To ensure that you are in compliance, it is always best to talk to a tax professional or consult with whatever local authorities are available to you, especially since the regulations are often in a state of flux. These experts will be able to help you understand how taxation will affect your product, advise you on how you should charge tax, and help you apply for a tax ID. They will also be able to inform you if you qualify for a tax exemption or resale certificate that are used by businesses when acquiring property for resale in its present form or as a component of other property.
Trademarks, copyrights, and patents. While there may be confusion regarding what legalities are associated with each, anyone looking to open an ecommerce store must understand and know the laws involving each one. According to the US Patent and Trademark Office, a trademark is considered a phrase, word, symbol or design that distinguishes the source of goods of one party from those of another. A copyright protects the work of authorship such as writings, music, or art that have been tangibly expressed. A patent is a property right relating to an invention granted by the US Patent and Trademark Office in exchange for public disclosure of the invention.
Depending on what product you plan to sell, you may not need to apply for any of these, but you should still know the legal implications of each since you want to make certain that your product sales are not infringing on other companies’ patents, trademarks, or copyright. You may want to start with a copyright, patent, and trademark organization to ensure you won’t run into trouble with your new business venture or contact a lawyer like Aaron Kelly, who specializes in ecommerce and intellectual property law.
Shipping and Age Restrictions. Most shipping companies will clearly note their restrictions on their business pages, but not all shippers restrict the same items. USPS, for example, restricts the shipping of aerosols, alcohol, ammunition, cigarettes, fresh produce, and perfumes among others, while FedEx lists as Global Border Prohibited items such as fine jewelry, art, watches valued over $1000, pornography, and postage stamps. Understanding the rules regarding shippable items within the US and globally will help alleviate future issues with regard to your product.
As an ecommerce store, you also need to be aware of the Children’s Online Privacy Protection Act (COPPA) and ensure compliance. This act involves many regulations, but one of the most significant is a site’s inability to collect personal information from a child under the age of 13. Ecommerce stores that sell age-restricted items should look into US codes, as well as state regulations regarding sales of specific items to minors. Every country and state is different with regard to ecommerce regulations involving age, so be sure your company is on the up-and-up.
Transparency. As you develop your ecommerce site, be sure to be explicit in all areas of compliance. Utilizing a website page templates will help you design a site that not only includes your company’s backstory, mission, and vision, but can also include critical information regarding taxation, shipping information, payment gateways, age restrictions, any applicable trademark or patent information associated with your product, licensure, and how you maintain PCI compliance.
What are some logistical or legal items you failed to anticipate when you started your ecommerce business? What is some advice you wish someone had given you at the business planning stage? Feel free to comment here.