Selling online from home can be a great idea if you want to start building a business quickly. In a way, you’re effectively cutting out the middleman, reducing overhead costs and giving yourself more creative control over your products and brand. While speed is the name of the game, however, that’s not to say you should be skipping every step.
Before you tuck into the huge opportunities the e-commerce space offers, it’s important to ensure you’re on the right side of the law, avoiding any potential headaches that could snowball into costly legal issues down the road. To help you out with this, we’ve created a list of the most important legal steps you need to take before getting your business out there, starting with the most obvious but also the most important.
Step One: Register Your Business
Right off the bat, you need to register your business and make sure you’re fully ready to operate. This includes choosing a name, and checking whether that name is available, registering with your local government or state, and choosing the right business structure. When it comes to that last point, this will be the most important thing in determining your taxes and levels of personal liability, so make sure you accurately decide whether you’re a sole proprietor, partnership, LLC, or corporation.
Step Two: Obtain the Necessary Permits
You also need to obtain the necessary permits. Depending on your location and the type of products you’re selling, this will be very important to ensure you’re operating legally, so make sure you check with your local government or state to determine exactly what you need before getting started.
Step Three: Make Sure You’re Insured
The next step is making sure you’re insured. From business property insurance to general liability insurance, it’s your job to protect your business from unforeseen events and make sure that, if they happen, you have the financial support needed to recover quickly. Not only is this a legal requirement in some states, it will also give you peace of mind to really focus on getting the business side of things right, knowing that, even if you make a mistake, it’s not going to spell the end of the world for your company.
Step Four: Register For Taxes
As a business, you’ll also need to be compliant with tax laws. To do this, you need to apply for an Employer Identification Number – EIN – from the IRS, and work to separate your personal finances from your business ones. As mentioned previously, it’s also crucial that you understand the sales tax requirements of your specific state and make sure you register with your state’s tax authority before getting started.
Step Five: Look Into Sales Tax
With that last step in mind, it’s up to you to research whether you should be charging sales tax based on your state’s laws, as well as the states where you’ll be shipping your products. Remember, sales tax laws vary by region and product type, so if you want to stay compliant, understanding your sales tax obligations will be necessary to avoid penalties or audits that could be detrimental to your company.
Step Six: Protect Your IP
Another important step that you might need to take is protecting your IP. If you’re running a business that is centred around unique products, designs, or services, your intellectual property is going to be one of your most valuable assets and, by protecting it, you’re ensuring others can’t copy or steal your ideas in the future.
Step Seven: Focus On Your Terms and Conditions
One last vital legal step is making sure you focus on your terms and conditions. For any business, the fine print is going to be what protects you if something goes wrong or a customer disputes a purchase. These are the conditions that outline the rules and guidelines for using your website and purchasing from your online store, and that means they should cover all the key areas, such as payment terms, shipping policies, return and refund procedures, and customer responsibilities. If you have those nailed down and make sure they’re readily available for customers, not only will you be protected, but you’ll be providing the customer with full transparency to avoid any misunderstandings or legal disputes.
