It is all the rage – start an Online or E-Commerce Store! Stay at home, avoid the high overhead, work on your own schedule, and sell things without any client face-to-face interaction needed. However, these types of businesses thatsell goods/products online present some additional legal concerns. As you probably have already gathered, going viral (so to speak) means your business is then subject not just state laws, but possible laws across the nation, and even international laws (yikes!).
As small business attorneys, we have seen so many online businesses make common legal mistakes (ouch!) that could have been easily avoided with proper planning and advice. Let’s discuss some special legal considerations that every online business owner should know now.
- Choose the Right Legal Structure: Before starting, you need to determine the right legal structure for your business. The most common legal structures for online businesses are sole proprietorship or limited liability company (LLC). See our blog HERE for more info on which entity you should choose. Each has its own advantages and disadvantages, and it’s essential to choose the structure that best fits your needs. Consulting with an attorney can help you understand the differences and make an informed decision.
- Protect Your Intellectual Property: Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, symbols, names, and images used in commerce. As an online business owner, your IP is your most valuable asset, so it’s important to protect it. This can include registering trademarks and copyrights, and securing patents. It’s also crucial to ensure that your website and online content do not infringe on anyone else’s IP rights (Yikes – cause this can cost you thousands!).
- Comply with Privacy Laws: Online businesses typically collect and store personal data from customers, such as names, addresses, and payment information. Therefore, it’s crucial to comply with privacy laws and regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). This can include obtaining consent for data collection, implementing data security measures, and providing customers with access to their data. As an online business, you must comply with these requirement including posting a Privacy Policy on your website to inform customers and potential customers of your policies.
- Follow E-Commerce Laws: Online businesses must also comply with e-commerce laws. These can vary by state and country. For example, your business may need to collect sales tax, comply with consumer protection laws, and adhere to advertising and marketing regulations. Failing to comply with these laws can result in legal action and reputational damage.
- Have Clear Website Terms and Conditions (or Terms of Use): Your website’s terms and conditions should clearly state how your online business operates, the services provided, and the responsibilities of both parties. This includes information on refunds, cancellations, and limitations of liability. Having clear terms and conditions can protect your business from potential legal disputes and ensuring you get paid.
Starting an online business requires careful planning and attention to legal details, especially when you can potentially subject yourself to so many laws. At Bounds Law, we have assisted hundreds of online businesses become compliant and protected. Schedule a consultation HERE.
