SHARE

Most Popular Reads

After you’ve evaluated your online business idea and have a plan for product sourcing, it’s wise to research the restrictions and regulations that may affect you when opening an ecommerce store.

Understanding these issues before you try to start selling online will help you plan wisely and save you time, energy and money.

In this chapter, we’ll highlight some of the obstacles that may lie ahead for your business.

Many of these issues are just part of the cost of selling products on the internet, but some may come as a surprise. Knowing about them ahead of time is the key to working through them.

1. Taxes

First, know that every state and country has different expectations and standards when it comes to taxes. That means you have to conduct some research and understand your target market.

For instance, if your store’s demographic is located in the U.S., you’ll likely want to display your prices exclusive of tax. However, if your target market is Australia, where shoppers are accustomed to seeing all-inclusive prices, you’ll want to include tax.

Other issues are related to what you are selling and where you are selling it from.

For instance, if you are located in New York and want to sell clothing, know that clothing is taxed in your state. In Britain, VAT tax applies to all non-essential goods. In California, items you sell in plastic bottles will carry a $0.11 recycling free, in addition to other taxes.

To cover all your bases, talk to a tax professional or whatever local authority is available to you.

They will be able to help you understand specific instances that may affect your product or business, give you insights on how you need to charge tax for your business’s location and help you apply for necessities like a tax ID, as well as let you know if you qualify for sales tax exemption and reseller certificates.

Keep in mind, too, that this information — and the regulations around it — is constantly changing. This is just one of the many reasons why having a tax professional on hand or working with your local tax authority will be an important aspect of running a healthy business.

Automate Your Accounting

BigCommerce has an extensive partner network of one-click apps you can begin using today to automate your accounting and taxes. Choose the app that is right for you and your business.

2. Payment Gateways

There are many payment gateways available for ecommerce businesses.

Don’t feel limited by the fact that many of them will have restrictions on specific products or services you may want to sell.

When you’re vetting payment gateways, just be sure to ask if they have any limitations around certain products, in addition to whether they are hosted or non-hosted, include anti-fraud features, or require transaction fees, termination fees, monthly fees or setup fees.

BIGCOMMERCE PAYMENT PROCESSING PARTNERS

BigCommerce connects with multiple payment gateways so you can choose which is right for your business. Learn more about the most commonly used:

3. Trademarks, Patents and Copyrights

There tends to be some common misconceptions about what these words actually mean, with must-know legalities and laws around each one.

The United States Patent and Trademark Office defines them as the following:

  • Trademark: A word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.
  • Patent: A limited duration property right relating to an invention, granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention.
  • Copyright: Protects works of authorship, such as writings, music and works of art that have been tangibly expressed.

Depending on what product you plan to sell, you may or may not want to apply for one of these.

Doing so isn’t strictly necessary, but you should at least check to make sure you’re not infringing on other patents or trademarks with your products or business. For instance, if you want to sell t-shirts with Star Wars characters on them, you’re going to run into trouble.

Simply make sure to research with the appropriate copyright, patent and trademark organization. They’ll help you start off on the right foot.

4. Shipping Restrictions

Most shipping companies clearly note their restricted items.

Not all shippers restrict the same items, so you should have options — just do a little research to see if there’s a provider that will take on your product.

Typically restrictions are placed on items like:

  • Aerosols
  • Air bags
  • Alcoholic beverages
  • Ammunition
  • Animals
  • Cigarettes
  • Dry ice
  • Explosives
  • Fresh fruits and vegetables
  • Hazardous materials
  • Nail polish
  • Perfumes
  • Perishables
  • Poison

Also note that some providers may allow you to ship usually-restricted items, but will require some extra paperwork and fees. You’ll want to take this into consideration as you evaluate your provider.

For information on shipping internationally, check out the Federal Trade Commission’s Electronic Commerce: Selling Internationally guide, which will help answer questions about taxes, duties and customs laws.

5. Inventory

If you’ll be holding substantial inventory, you should also check your lease, deed or zoning codes to see if there are any prohibitions on running a business like the one you’re contemplating out of your home.

Zoning Laws Matter

When Nine Line first launched, orders began coming in more quickly than they expected. Soon, they moved inventory and shipping to a foreclosed home they bought for the storage.

From the local police’s point of view, however, it wasn’t t-shirt shipping the squad first assumed when they staked out the house.

Find out how Nine Line overcame a police raid in Florida, and used it to help bolster their business.

6. Age Restrictions

Anytime you launch a website, it’s essential to comply with the Children’s Online Privacy Protection Act (COPPA).

This act includes quite a few regulations, but the one that will likely apply to your site is the inability to collect any personal information from a child under the age of 13.

If you’re planning on selling a product or service that tailors specifically to a young audience, you’ll need to abide by COPPA regulations.

As far as age verification requirements for ecommerce stores selling age-restricted items, you should look into your country’s specific codes. Sites selling items like vapes or alcohol, for instance, need to have age verification tools before checkout in order to be legally sold, for instance.

Every country is different as far as their demands on how to run a business, and things get especially tricky when it comes to age restrictions on products. Do your research and stay on top of legislation to ensure your business is on the up-and-up.

7. Business Insurance

There are multiple types of insurance for small businesses, including general liability, product liability, professional liability, commercial liability and home-based insurance. Reach out to your local provider to find out which type would be best for your business and location.

During your vetting process, it’s a good idea to at least take a look at product liability insurance. It’s intended for companies that manufacture, wholesale, distribute and retail a product and may be liable for its safety.

Also look into professional liability insurance (also known as errors and omissions insurance), which protects your business against malpractice, error and negligence.

8. Licenses and Permits

Depending on which product you decide to offer, you may need a license to sell it.

This varies based on the country in which you’re located, so contact your local licensing department.

Legal Zoom is also a great resource that can not only help with licensing, but also with some of the other red-tape items in this section.

“If you’re selling special products to a regulated industry (e.g., medical devices or holistic health care supplements), you’ll need to check with your state to see if you need to be licensed to provide those kinds of products or service,” wrote Nina Kauman for Entrepreneur. “But generally, the sale of digital information, clothing or handcrafted items (made in the USA) doesn’t require a special business license. Rather, the business licensing required for an online retail business is not substantially different than that of a storefront business.”

9. PCI Compliance

PCI compliance is a necessary protection for online sellers, and nearly all SaaS ecommerce platforms have it baked in to some degree.

Online businesses tend to be prime targets for data theft, which is why ecommerce providers take it so seriously.

However, make sure to educate yourself. Being PCI compliant doesn’t just mean providing a secure, encrypted checkout experience — you’ll also need to avoid storing any purchasing information on paper or via recording (e.g., if someone were to give you their card number over the phone).

BigCommerce has you covered

BigCommerce takes care of the vast majority of your PCI Compliance needs. Our Cardholder Data Environment is PCI DSS 3.1 Level 1 certified as both a Merchant and a Service Provider. This protects against credit card data breaches and eliminates the significant cost and hassle of compliance.

Read more about what it takes to become PCI Compliant here.

10. What You Didn’t Know You Needed to Know

There are also individual platform requirements that you may need to be aware of before starting your business. For instance, when you download Facebook Messenger (which you can now use to transfer payments!), you are agreeing to have Facebook listen to you and serve ads based on what you say.

No, you were not imagining ads popping up after having a conversation with your spouse in the kitchen earlier that night.

Understanding the implications of all these laws is essential for the health of your business — and the protection of consumers who become your customers.

Continue on to the next chapter to learn how to conduct market research to ensure that your product idea is not only feasible, but profitable, too.

Want more insights like this?

We’re on a mission to provide businesses like yours marketing and sales tips, tricks and industry leading knowledge to build the next house-hold name brand. Don’t miss a post. Sign up for our weekly newsletter.

Subscribe

Table of Contents

IntroHow to (Realistically) Start an Online Business That Actually Grows
Chapter 1 What to Sell in 2017: How to Find a Product Niche and Start Selling Online
Chapter 2 How to Evaluate Market Viability for Your Products
Chapter 3 How to Conduct Online Market Research for your Ecommerce Business
Chapter 4 How to Conduct a Competitive Analysis for Your Online Business [with templates]
Chapter 5 10 Online Business Laws You Need to Know for Internet Selling [Updated 2017]
Chapter 6 How to Identify and Analyze Your Target Market in 2017
Chapter 7 How to Source and Manufacture Products for Your Online Business
Chapter 8 How to Create and Launch a Profitable Online Store (Seriously)
Chapter 9 59 Productivity Hacks for Online Small Business Owners
  • You’re very welcome! Always happy to help you here if you need it but we can help you even more in the Bigcommerce Community Forum. Not only will you find more Bigcommerce staff but you’ll also be able to speak with our Partners and other expert clients who have been there before.

    Happy selling!

  • Will Steel

    Awesome thank you.

  • Will,

    Hmm, let’s see here. Unfortunately, I have not encountered this personally. Although I know of clients who have run into this and I cannot put you in contact with them directly. So, I did some research for you and found a pretty good example! Although this isn’t a perfect fit to what you’re asking it is a good baseline as the other business may feel you’re trying to infringe or dilute the industry.

    Check out this example from NOLO.com. From here, I may snoop around NOLO.com as they always seem to have great advice and specific examples as well.

    Thanks so much and good luck!

  • Will Steel

    Katey,
    Thanks for the reply. I realize you don’t want to offer any comment, insight, or advice that would lead to a litigious situation for us later but had hoped you would have had some 1st hand knowledge or example you could have shared.

  • Will, thanks so much for reading and your question! I apologize for such a delay. I have been out of the country for the last week.

    Regarding any type of legal concern, my response will always be the same. I’d highly advise you speak with a lawyer to ensure everything is on the up-and-up. In this case, it looks like you’re going to want a trademark lawyer specifically. You will get the most up-to-date advice and guidance plus, you’ll make sure you’re business doesn’t make any costly mistakes.

    If all else fails, it never hurts to make friends. By this I mean that you can attempt to speak with the company directly and gain permission for what you’d like to do. In your particular situation, you could end up partnering up with said business and even get some cross-promotional campaigns together to help boost awareness around both of your businesses.

    Hope this helps! Happy selling and be well.

  • Manmay,

    Thanks for reading! Glad you enjoyed. Please feel free to toss out ideas for future posts. We want to be sure to cover topics that are truly helpful to you. Be well!

  • Will Steel

    Katey thanks for the article. I have a question re trademark names and their use in selecting a domain name to better define a market and specific offer. If I own Business 1 set up to promotes a specific product/service for a client who owns Business 2 and that business is established and authorized to operate within Business 3, an established recognizable chain with a trademarked name; can I use the name of the chain within the name of the domain we are setting up to promote more attention to our clients unique opportunities as they relate to Business 3 opportunities operating in that chain? i.e WidgetsWithinXYC.com (Widgets= a discriptive word refering to what my client is authorized to offer within the chain) and (XYC= name of the chain store). Hope this was not too confusing. Thanks

  • This is very insightful. Today customers want the fastest shipping, And the competition in eCommerce business has been increasing immensely day by day. Thanks for sharing…:-)

  • Hi Paul, thanks so much for reading and the the great question. Yes, according to EU cookie law, any EU-based website, regardless of where the site is hosted, will need to inform all website visitors of cookies. If you’re referring to the newer law that specifies data must be stored in the EU, there is an exception for US safe harbor data centers, which ours is.

    In short, you will need to notify visitors of cookies. Let me know if you have further questions or concerns. We’re always happy to help.

  • paulburgess

    Here’s a question…in Europe we have a stupid bloody dumb poxy EU law that says we must inform all visitors about cookies. Indeed, BC have a feature for this. But what is the story regarding our website being on US servers as they are with BC? Would this law be applicable?