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Starting an e-commerce business is about more than having an idea and sourcing products, raw materials or manufacturing operations. E-commerce business owners need to be familiar with the laws and legislations that govern their business, which may vary depending on the country or state the business is based in. Some of the regulations apply to all types of business, while there will be others that are specific to operating online. The PDF attachment explores the key differences between commerce and e-commerce.

Understanding the regulations and compliance requirements for e-commerce from the start is part of the process of giving a new business the best possible chance for success. Thomas Noel Collister Jackson is a member of UK law firm Smart Law Solicitors LLP, which includes e-commerce law as one of its special areas of interest.

Taxes

Taxes is one area where there will certainly be different regulations and laws depending on the region the business is based in. Company owners need to familiarise themselves with the types and amounts of taxes they will be liable for, so that these figures can be incorporated into the business plan and financial projections. For example, all non-essential goods sold in the UK have value added tax (VAT) applied.

Payment Gateways

By necessity, e-commerce businesses will conduct all their financial transactions with customers online, so implementing a secure payment gateway is essential. The embedded short video offers some advice on how to choose the right payment gateway for a business.

There are many widely available third-party payments sites to choose from.

Data Protection

Recent changes to legislation in Europe and other parts of the world have made data protection a key issue for anyone handling other people’s personal information, which includes financial details, billing addresses, and any other data held.

In Europe, compliance with GDPR is a legal requirement. GDPR, or the general data protection regulation, establishes the specific rules which apply to how a person’s data must be stored, how long it can be kept for, and what purposes it can be used for, among other things.

A link to the data protection policy of a company should be prominently displayed somewhere visible on its website for customers to click through to if they wish to read it.

Shipping Restrictions

E-commerce relies heavily on shipping. There are various options for shipping and courier services available, which will have varying costs depending on factors such as product type, volume, weight, and expedience of delivery. Many shipping companies will have restrictions on certain items, which can include everyday goods such as alcohol, perishables, aerosols, perfumes, nail polish and air bags, as well as more obviously restricted items such as ammunition, explosives, poisons and hazardous materials.

Inventory

Many e-commerce businesses start life being run out of their owner’s home. In many cases, this works just fine at the start, but entrepreneurs should be aware that there may be restrictions on what they can do from their homes and what can be stored there as inventory.

There may be restrictions set out in zoning laws – or in the specific mortgage deed or lease agreement – that need to be navigated. Any business owner planning on stocking large amounts of inventory may find it beneficial to rent warehouse space to circumnavigate these restrictions.

The infographic attachment looks at some of the most successful e-commerce businesses currently in operation.