E-commerce And Online Business Legal Considerations

Whether you're a small start-up E-commerce business or a rapidly scaling business organization, all respective actions and operations are controlled by copyright, corporate, and contract laws (with many others).

Of course, let's not forget the legal considerations pertaining to corporate governance and safeguarding consumers. Every business runner must stay up-to-date and compliant with existing online business and E-commerce legal considerations to avoid unforeseen complications. 

Let us now elaborate more on the necessary legal considerations for online businesses and e-commerce platforms.

• Be Clear on All Taxation Obligations

Tax obligations bind all US-based E-commerce platforms and online business set-ups. Failing to gauge and accumulate precise sales tax amounts could cause a major dent in their profit margins. Furthermore, it leaves business owners with the additional headache and stress of arranging all these during the taxation season. 

Of course, being aware of all taxation obligations beforehand helps avoid such unwanted complications and stress, thus allowing business owners to engage in sales operations as usual.

Also, be informed of Eco-tax obligations. Eco-taxes are introduced to promote sustainability on activities and operations perilous to the surrounding environment.

Per the CRV (California Redemption Act), an additional recycling fee of $0.05 is charged for using less than 24 ounces of plastic containers and $0.10 for equal or more than 24 ounces.

Eco-taxation occurred at the beginning of 2022 and included all (to and from) international business operations.

• Negotiate All Written Agreements with 3rd Party Service Providers

Most online businesses depend on 3rd party service contractors like hosting services, content dispatch networks, advertisement, website design, and other related services. 

Thus, such online businesses and E-commerce platforms must have sound written agreements with associated 3rd party providers to define and regulate their business relationships. 

Before agreeing to any collaboration, business runners must read all agreement-related terms and conditions. Moreover, business runners must negotiate agreements before finalizing anything to ensure both parties are content and that the terms are apt for business requirements.

Furthermore, the agreement or contract must be enforceable by the law, and both participants must willingly sign the agreement as proof of their collaboration. 

• Pick a Suitable Domain Name Free from Infringement or Violation

Online business/E-commerce business heads must be careful when selecting domain names or URLs for their business. Ideally, they must pick one that's easy to remember. And while doing that, they must ensure the chosen domain name is devoid of any infringements or violations of 3rd party trademarks' legal obligations.

Furthermore, online business/E-commerce business heads must also seek ways to become immune to copyright infringements.

Business runners must familiarize themselves with the 1998 DMCA (Digital Millennium Copyright Act). The provision establishes certain precautionary measures for web users/online business runners to safeguard themselves against copyright infringement claims.

Unfortunately, the DMCA doesn't provide any safety measures against trademark infringements. Considering this, business owners must take it upon themselves not to misuse 3rd party marks. Instead, they must seek consent to use such marks and showcase good faith to avert forceful takedown policies.

• Include Clearly-Defined Rights to Publicity and Privacy

Online business/E-commerce business heads must incorporate transparent and well-defined rights to publicity and privacy. Such regulations protect their financial details, medical documentation, and online information.

Moreover, such privacy and publicity laws also help companies avoid legal punishments from FTC- Federal Trade Commission and State Attorneys General. 

Plus, online business/E-commerce platforms must impose control over any unauthorized access or disclosure of their safeguarded images and data without prior authorization.

• Knowing the Influence of Agency Liability 

Many online businesses/E-commerce platforms experience agency liability (the lawful responsibilities of a business set up for their agent's actions). Such agents function on the company's behalf as a 3rd party contractors or employees. 

Business heads have to grant authorization to their agents to perform duties on the company's behalf to prevent agency liability. While doing that, business heads must also ensure their agents operate adhering to the authorization. 

Thus, online businesses must incorporate specific policies and regulations to handle their agent's actions. 

• Focusing on Shipping Restrictions & Regulations

Logistic companies comprise several shipping restrictions and regulations for E-commerce operations. These rules and regulations differ per product. Some of them are also labeled as restricted items or unsuitable for shipping.

The restricted products are as follows –

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

Of course, some logistic companies may allow a business to ship a restricted item at additional costs and paperwork. Thus, business runners engaged in producing and distributing those restricted items must accept and adhere to these levied considerations.

They must provide detailed paperwork for the dispatchable item. Of course, they must properly evaluate the shipping/logistic provider and their integrations.

Furthermore, E-commerce/online business owners must refer to the 'FTC- Federal Trade Commission – E-commerce international selling guide' to learn about customs laws, shipping taxes, imports, duties, etc.

• Check Applicable Property Laws for Business Inventory

To discover any prohibitions, E-commerce/online business heads must also check real-estate leases, zoning codes, general business licenses, health and safety permits, and deeds. For such businesses, certain property laws are levied. 

Moreover, there is another option for those who don't occupy a brick-and-mortar office and conduct all E-commerce operations from their home.

Such business heads can leverage a partnership with a shipping and fulfillment company expertizing in 3rd party logistic providers and dropshipping. Doing so will lessen shipping zones or save long-distance package transits, thus reducing shipping expenses and transit time. 

Additional Tip – E-commerce store owners may not require business insurance. However, if you are registered as LLC (Limited Liability Company), you still must get legal counsel to affirm all personal asset protection.

Final Lines 

Comprehending the various implications of business laws and regulations is crucial to keeping your online E-commerce/online business healthy and protected.

So, whenever you start a new business online, focus on these legal considerations to future-proof it and protect it against legal catastrophes and expensive operation misfortunes.

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