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Whether you want to expand your Australian business overseas or start selling to an international market, there are a number of legal considerations to keep in mind. For example, will your IP protections be valid internationally? How will taxes work? Do I need additional documentation?
Most businesses choose to expand because an international market offers greater opportunities for growth. For example, you might do business overseas to start a franchise, and maximise your profit-earning potential.
In a technology driven world, it’s not uncommon for businesses to offer their products on the international market. However, with this kind of rapid online growth comes a lot of legal responsibilities, both domestic and international.
The article will explain some of the key legal considerations when moving your business overseas.
How To Start A Business Overseas
If you want to start a business overseas, you’ll need to ensure that you are compliant with the laws of the country you’re operating in. This means ensuring your documents are legally enforceable under international contract law (we’ll cover this later) and meeting overseas employment standards.
You’ll also need to think about how to protect your IP internationally, taxes, customs and other key aspects of starting a business.
What Do I Need To Consider Before Selling Overseas?
Once you have determined there is potential for your business to expand overseas, it’s important to make sure you have covered all the legal aspects of operating a business across borders.
Protecting your business’ assets, having the right business structure, and ensuring your contracts are legally valid in the other country are just some of the things to be mindful of when starting a business overseas.
We’ve collected some handy information on these legal points and more below.
How Does Intellectual Property Work When You’re Doing Business Overseas?
If you’ve branded your business with a trademark, logo or any other kind of intellectual property you would like to keep, then you need to consider international trademarks. An Australian trademark is only protected within Australia, and there is also the issue of whether copyright is valid internationally.
For your trademark to be recognised overseas, you can submit an application to another country directly and follow their internal processes.
Alternatively, you can file an application to have your trademark internationally recognised with the World Intellectual Property Organisation. It’s known as the Madrid System and protects your trademark in 126 countries.
Our lawyers can help you Register An International Trade Mark.
Following Overseas Laws While Doing Business
When selling overseas, you are not just expected to follow the laws of your own country, but also the destination country. It’s vital to consider the laws of the country or various countries you will be shipping out to.
For example, a lot of eCommerce businesses are under a dropshipping model which requires consideration of the destination country’s shipping rules and laws when drafting their contracts.
The last thing you want is your business in trouble because you decided to ship something that was illegal in another country.
In many cases, you’ll need to adjust your business contracts to ensure they are consistent or compliant with the laws of the destination country. Businesses commonly come across the issue of how they can draft an internationally enforceable contract – we’ll cover this in more detail later in this article.
| Example If you have a business selling wine in Australia and you’d like to expand to Asia, you may be impacted by Chinese wine labelling and packaging laws. Rather than risk violating Chinese laws, you should seek legal guidance on any regulations that may affect how your business operates. Our online lawyers can answer any legal questions you might have around eCommerce laws and how this will play out if you’re conducting business overseas. For example, we offer an eCommerce Terms & Conditions package which can be tailored to your overseas arrangement. Read on for more about what your options are when expanding overseas, and how you can protect your business. |
Setting Up A Subsidiary Or Branch
If you are conducting business in another country, you may be required by the laws of that country to Establish A Subsidiary or a branch in that country.
For example, in Australia, international businesses are required to establish a subsidiary or branch in Australia if they carry on business in Australia. Similar rules may apply to international jurisdictions where your business is exporting or selling to.
It’s important to consider this requirement and potentially speak with local legal or accounting experts before you start selling or exporting to a particular country.
Dealing With Customs As An International Seller
If your business offers shipping worldwide or to a select few countries, you need to be familiar with the customs rules and regulations for each destination. This includes being on top of customs declaration forms, items that can enter the country and packaging requirements. It is essential to keep an eye on these regulations as well — they tend to be subject to changes.
Australia also has its own set of rules and regulations that people who are exporting goods must follow. There are items that can and can’t be exported, as well as specific criteria that need to be met, so make sure you familiarise yourself with the relevant information.
How Can A Business Compete With Overseas Competitors?
Starting a business overseas means opening yourself to a new market of customers and potential competitors.
Establishing success in another territory requires getting to know that place first. Consider making a trip to the destination you plan on expanding to and checking out what other businesses in your field are doing there.
You may find the social climate vastly different and need to adjust aspects of your product or service to fit in with the overseas demographic. For example, a certain word may be fine in English but offensive in another language. If this is the case, you will need to ensure the word is not used in your products marketing or advertising.
Venturing out overseas to do business can also have the added benefit of creating connections in a place other than your local area. Learning the language, making friends and overall building a presence in your overseas destination can be extremely impactful when starting a business internationally.
Navigating Export/Import Taxes
Taxes will vary depending on the destination country. If your business does not physically operate in a country, then it is likely you will not need to pay tax for simply selling to the destination.
Many businesses profit from eCommerce, meaning their business is based entirely online. If this sounds like your business, then you may not need to register for Goods and Services Tax (GST) in Australia. This will depend heavily on the functions of your business and turnover income. More specifically, if your business earns a revenue that exceeds $75,000, you will need to register for GST.
The taxes you pay will also depend on your business model. That is, whether you are selling directly to your customers or there’s a third party business. As this situation is unique to each business, it’s advisable to seek the advice of a legal professional.
International Contract Law: How Does It Work In Business?
Expanding business operations to an overseas location means ensuring all legal documents can be enforced in other jurisdictions. In other words, you want to make sure your contracts are internationally enforceable.
The best way to do this is by having international arbitration clauses in your contracts.
If you don’t have these, you’ll need to speak to the other pay and come to an agreement around the following two matters:
- Governing law
- Jurisdiction
These terms will set out the process for settling disputes in an international context and which country’s laws will apply to the enforcement of a judgment.
A contract that can be applied in multiple jurisdictions is essential when doing business overseas.
Documentation Needed For Selling Overseas
Having an eCommerce business still requires you to complete a lot of the same documentation you’d need to take care of if you ran a physical business. This will include documents such as:
- Employment Contracts – if your eCommerce business is hiring employees, it’s important to have a written agreement detailing the roles and obligations of both parties.
- eCommerce Terms and Conditions – as the business will be operating online, it’s essential to have a set of rules users must agree to prior to using your website.
- Supply Agreements – A formal supply agreement will detail the most important aspects of your relationship with your supplier. The agreement covers matters such as delivery, liability, costs, materials, price, warranties, and termination.
These are only a few of the many things you’d need to consider as an eCommerce business. Having a legal expert help you draft agreements that are tailored to your business can aid in avoiding potential legal disputes in the future – our lawyers are always happy to help.
Do You Need A Specific Privacy Policy To Sell Goods Online?
As an online business, your website will need to adhere to the privacy laws of each country you operate in. If you are selling to the EU, you need to comply with the General Data Protection Regulation (GDPR). To be eligible for the GDPR, your business will need to:
- Be active in a European Nation
- Process the data of citizens that belong to the EU
- Have more than 250 employees- if you have less than 250 employees, the GDPR is still applicable if the above point applies
Even if your business doesn’t fall under the requirements for the GDPR, as a seller you are collecting the private information of your customers to process transactions. Therefore, it’s vital your business has a strong privacy policy that is accessible on your website.
A Privacy Policy generally will include things such as:
- What kind of data is being collected- emails, phone numbers, credit card details, addresses.
- The use the business will have for the data, such as analytics
- The reason behind collecting the data
- Storage and retention of the data
What About Shipping and Returns?
Ensuring you have clear shipping policies that can be easily accessed by your customers will help you avoid potential disputes in the future. You may have unhappy customers and potential shoppers that are thrown off by shipping costs or items that are damaged on the way there. Your policies and internal processes can better prepare you for these instances.
Shipping information and declarations can include matters such as:
- Disclosing shipping costs: Shipping overseas is more expensive than shipping locally. You will need to make the shipping cost available to your customers on your platform – nobody likes getting hit with unexpected charges at checkout.
- Disclaimers for international shipping: There’s a lot that’s out of your control when shipping overseas. The carrier will be local to the customer and, therefore, it’s important to have a disclaimer to avoid responsibility for matters that are out of your control.
- Return policies for international buyers: A customer may wish to return an item- it’s important to have a process in place for when this situation arises.
Want To Start A Business Overseas?
Expanding a business overseas or selling in the international market comes with a list of legal considerations. So, it’s always wise to seek the advice of a legal professional to ensure your policies, agreements and the decisions you make generally are all compliant with the relevant laws.
This article has listed some of the general concerns, however, what you need will depend specifically on your business and its goals in the international market. It’s always best to get advice that is catered to you.
Our legal consultants are available and happy to help. If you would like a consultation on your options for selling overseas, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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