Online retail is convenient for both businesses and consumers. As such, its intensely growing popularity doesn’t come as much of a surprise. For a lot of business owners, participating in eCommerce has become a crucial way to stay relevant in the changing market. 

However, while you’re getting swept up in the world of eCommerce, it’s important not to forget the strong legal landscape that surrounds it. Afterall, running an eCommerce business is so much more than just having a really great website. There’s a number of legal concerns that need to be addressed, both for the protection of your business and anyone that interacts with it. 

Keep reading to learn more. 

Understanding eCommerce Law

There isn’t one, single legislation which uniformly applies to all eCommerce businesses across Australia. Instead, there’s a number of different legislations affecting each eCommerce business. 

From data and privacy laws to intellectual property law, eCommerce law is a widely varied area for legal compliance. It’s also necessary to remember that every eCommerce business is different. Therefore, the exact laws each organisation is required to follow will differentiate from one another. Laws also change from time to time, so staying up to date is essential! 

Talking to a legal expert will help you better understand the eCommerce laws your specific business needs to be aware of. 

Importance Of Compliance For Online Businesses

Often business owners make the mistake of delaying or not bothering at all to understand the eCommerce laws that bind their business. In order to run a successful eCommerce business, legal compliance is of crucial importance. 

You want to avoid the consequences of legal non-compliance such as legal penalties, a bad business reputation and fines. Plus, business tends to run a lot smoother when you’re following the law, so legal compliance should be a top priority for any eCommerce business. 

Laying The Legal Foundation In Setting Up Your Online Business

In many ways, the legal groundwork for your eCommerce business is laid down during the setup process. Therefore, it’s important to take the time to properly understand what you’re doing and ensure you’re making the right choices. Getting the help of a legal expert is always a good idea, as they can provide you with professional guidance and ensure legal compliance throughout each step of the process. 

Registering Your Business

Registering an eCommerce business is not different to registering a traditional brick and mortar business – both will need to follow the same rules. However, the exact process will depend on the legal structure you choose for your eCommerce business (more on that below). 

Ultimately, you will need to register your business through the correct government body, make sure you’ve registered a business name (unless you meet one of the exceptions) and complete the necessary paperwork, such as a Founders Term Sheet or a Partnership Agreement

Choosing A Legal Structure

As we mentioned, the registration process for your eCommerce business will depend on the legal structure you choose for it. In Australia, there are three common types of legal business structures; sole trader, partnership and a company

A sole trader and partnership legal structure have a relatively simple set up process however, they don’t offer much legal protection. If you choose to register your eCommerce business as a sole trader or in a partnership, then your business will be legally tied to you personally, making you liable for everything that happens within it. 

Despite this drawback, business owners find setting up as a sole trader or in a partnership business more appealing as it simply involves attaining an Australian Business Number (ABN) which can be done for free online. For those registering as partners, each partner will need their own ABN. Business name registration is also required if you’re using a name for your business that is different to your personal name(s). After that, the set up process for a sole trader or partnership business is complete. 

The setup process for a company on the other hand, is a little more complex. Every company needs to be set up with the Australian Securities and Investments Commission (ASIC). The process involves choosing the type of company you want to run, selecting directors, shareholders and determining how the company will be governed. 

The process can seem intimidating however, a company offers much more legal security than any other business structure. Once a company is registered, it becomes a legal entity on its own, allowing it to function separately from you. As such, your personal liability is limited when you run a company, making it the more legally secure option. 

If your eCommerce business is a serious business venture, then we recommend going the route of setting up a company. It’s best to have a legal expert help you out with setting up your company – that way you can be assured everything is getting done the right way.

Obtaining Necessary Licenses and Permits

Once you have successfully set up your business or company, the next step is to make sure you have the necessary licences or permits to run your eCommerce business. The exact licenses and permits required will depend on the industry you’re in as well as where you are located.

For instance, zoning regulations might call for you to obtain local council permission prior running your eCommerce business. Perhaps your industry has licensing requirements for selling particular items, such as alcohol. It’s important to conduct thorough research and acquire the necessary licenses and permits before you begin business operations – that way you can avoid any unwanted trouble. 

Building Trust Through Consumer Protection Laws

After setting up your eCommerce business, the next step is to gather the necessary legal documentation and start tightening your business policies. This is a good time to revisit the laws that impact your consumer interactions and ensure your business practices are in line with them. Not only will this prevent your business from getting into trouble with the law, consumers are also more likely to appreciate a business that upholds their rights. 

We’ve listed a few things you should be doing to follow through with consumer protection laws below.

Privacy Policies

Australian privacy laws require any business website that collects private information (or has an annual turnover of more than $3 million) to have a Privacy Policy visible on their website. A privacy policy is an important legal document, as it lets visitors to your eCommerce business website know what is being done with their information, the purpose it’s being collected for and how long it will be kept for. 

A strong, well drafted privacy policy is necessary in order to be compliant with Australian privacy laws. 

Terms and Conditions

A Website Terms and Conditions isn’t just necessary to protect consumers, it also helps protect your business. A website terms and condition covers important matters such as ownership, payment methods, liabilities and appropriate use. It lets consumers know what they can and cannot do while using your eCommerce business’s website, so it provides necessary protections and boundaries for your business too.  

Refund and Return Policies

Another matter to consider is your eCommerce business’s refund and return policies. The Australian Consumer Law (ACL) has some pretty strict rules on a consumer’s right to return items and when they can receive a refund. It’s necessary to ensure your eCommerce business follows these laws. Make sure to properly communicate your return and refund policies to consumers, so there’s no misunderstanding. It’s also a good idea to ensure staff are well informed on these matters through Workplace Policies and Staff Handbooks

Protecting Sensitive Information with Data Protection and Privacy

Earlier, we mentioned the importance of having a privacy policy on your eCommerce business website in order to comply with Australian privacy laws (see above). However, a privacy policy is just the tip of the iceberg when it comes to data protection and privacy. There are multiple other methods you’ll need to employ to protect your eCommerce businesses’ sensitive information. Moreover, if your ecommerce business is going to operate outside of Australia, you will also need to take into account the privacy laws of those regions. 

GDPR Compliance

The General Data Protection Regulation (GDPR) is the UK’s set of privacy guidelines. While the GDPR also requires websites to have a privacy policy, its requirements differ from those in Australia. Therefore, we recommend not relying solely on your Australian privacy policy. Instead, consult a legal expert to create a GDPR Privacy Policy that meets the necessary requirements.

CCPA Requirements

Apart from Australia and the UK, other regions, such as California, have their own data protection laws. The California Consumer Privacy Act (CCPA) outlines the requirements for businesses to comply with privacy laws in California. Although Sprintlaw does not handle CCPA requirements, it is important to be aware of these regulations and ensure your eCommerce business adheres to them.

Best Practices for Data Security

To maintain data protection and privacy, your eCommerce business needs to be proactive. Implementing encryption, conducting regular security audits, and providing employee training are crucial steps to safeguard your business information. Additionally, regularly review your practices and stay updated with the latest legal developments in data protection.

Chatting with a legal expert about your data and privacy practices is highly recommended. Many business owners overlook the importance of legal advice in data protection however, it is essential to take the necessary precautions and cover all bases in case of any issues. There are also legal instruments, such as a Data Breach Response Plan, that can help protect your business more effectively. 

Safeguarding Your Brand with Intellectual Property Rights

Intellectual property (IP) is another key factor in the eCommerce legal landscape. An eCommerce business’s most important assets are often its IP, therefore it’s vital to secure ownership.

If you fail to secure ownership of your IP in a timely manner, the consequences could be catastrophic. This is because your options are often limited if someone decides to steal or misuse your IP. Moverover, it can take a lot of time and resources to correct the problem (if at all). An IP disaster is terrible for business, so it’s better to prevent this situation from happening altogether. 

We’ve listed a few ways you can protect your IP. 

Trade Mark Registration

If you have a unique logo, business name or anything else you want to legally secure then it’s important to register it as a trade mark as early on as possible. The process to register a trade mark can take several months and it can get complicated, so make sure you have the help of a legal expert. Generally, the process for registering a trademark will involve: 

  • Conducting a search on the Australian Trade Marks Online Search System to make sure it’s not already taken
  • Determining the correct class for your goods/services 
  • Filing an application with the Australian Trade Marks Office    
  • Going through an examination to assess any conflicts or issues  
  • If there’s no issues, the trademark will then be published for an opposition period 
  • If the trade mark is unopposed, it will then be eligible for registration 

Copyright Issues

Another common IP issue eCommerce businesses face is copyright. When you create something original, copyright is automatically applied. Even though this happens on its own, there’s very little legal protection that comes with copyright. Therefore, to protect your copyright materials, you will need to seek out extra legal protection. 

The kind of legal protection you will use for your copyright materials will differ. It can range from a Copyright Disclaimer to Non-Disclosure Agreements (NDAs). It all really depends on exactly what you’re protecting and the legal risks associated with it. A legal expert will be able to provide you with the right kind of guidance on the best way to protect your copyright materials. 

Dealing with Infringement Claims

Infringement claims, whether you’re the accuser or the one being accused of infringement, are much easier to handle when you’ve taken the appropriate legal measures beforehand. 

Needless to say, if you’ve found someone else is infringing on your IP, then it’s much easier to assert your claim when you have the proper legal security, such as a registered trade mark. If you’re using another person’s IP, then it’s important to make sure you have the legal right to do so by acquiring an IP licence to avoid an infringement claim. Without the proper legal documentation and approval, you could be ordered to cease using the IP immediately or face other legal penalties. 

Financial Obligations in Taxation for eCommerce

As an eCommerce business, you will also need to be aware of your tax obligations. Needless to say, different taxes apply for business. While it’s not something we can help you with at Sprintlaw, we covered it briefly for your knowledge here. 

Sales Tax Collection

Sales tax, more commonly known as goods and services tax (GST), needs to be paid when your business has an annual turnover of more than $75,000. 10% GST is charged on most goods and services sold. Business Activity Statements (BAS) also need to be regularly lodged with the ATO. It’s important to issue tax invoices for sales over $82.50 and maintain accurate records for at least five years.

VAT for International Sales

Australian businesses exporting goods usually do not charge GST but they must be aware of VAT laws in certain countries and register for VAT if they meet their requirements. Keeping accurate documentation of exports and imports is essential to manage VAT obligations.

Tax Reporting Requirements

eCommerce businesses must lodge an annual income tax return, with corporate tax rates of 30% or 27.5% for small businesses. GST-registered businesses need to lodge BAS regularly, report PAYG withholding for employees, and manage other obligations like FBT and superannuation contributions. State taxes such as payroll tax may also apply, so it’s important to be aware of these and keep the necessary records. 

Leveraging Expertise Through Working With E-commerce Experts

There’s a lot of legal factors to consider when starting an eCommerce business. From properly registering your business to having policies and practices which are legally compliant, many of your business operations are dependent on legal compliance. 

With eCommerce law playing such a detrimental role in business, it makes sense to leverage expert help. Legal matters aren’t something you should take lightly. Non compliance and weak legal preparation could seriously jeopardise your business. Having a legal professional in your corner can help you run a business that is well prepared and legally strong. 

Let Sprintlaw Be Your Partner in Compliance

It can be hard to know where to look when it comes to finding the right legal team to back your eCommerce business venture. At Sprintlaw, we’re a completely online law firm so our legal experts are available at your convenience. 

Our team specialises in a wide range of eCommerce law such as consumer regulations, IP protection, contract drafting, data protection and more – chat with us today to discuss how we can help. To summarise what we’ve discussed: 

  • Having an eCommerce business requires attention to legal aspects
  • eCommerce laws in Australia are varied and include data privacy, intellectual property, and consumer protection
  • Compliance with these laws is essential to avoid penalties, fines, and reputational damage
  • Setting up an eCommerce business involves choosing a legal structure, registering the business, and obtaining necessary licenses and permits
  • Legal structures include sole trader, partnership, and company, each with different levels of liability and protection
  • Consumer protection laws mandate clear privacy policies, terms and conditions, and refund/return policies
  • Data protection requires compliance with Australian laws, GDPR for the UK, and CCPA for California
  • Intellectual property protection through trademarks, copyrights, and dealing with infringement claims is crucial
  • eCommerce businesses must comply with tax obligations such as GST and VAT for international sales
  • Consulting with legal experts like Sprintlaw can ensure comprehensive legal compliance and protection for your eCommerce business

You don’t have to navigate the complex world of eCommerce compliance alone. Let Sprintlaw help you stay on top of your legal obligations and focus on growing your business. If you would like a consultation on eCommerce law, you can reach us at 1800 730 617 or for a free, no-obligations chat.

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Sprintlaw's expert lawyers make legal services affordable and accessible for business owners. We're Australia's fastest growing law firm and operate entirely online.

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