Running an eCommerce store may seem like a very straightforward process. With a platform like OpenCart you can launch your store in minutes. The over 13,000 extensions that are integrated with OpenCart further make it possible for you to seamlessly manage your shipping, payment processing, marketing, and accounting.

However, one component of eCommerce that a lot of first-time entrepreneurs struggle with is legal compliance. 

Depending on which part of the world you are from, and where your customers are targeted, your eCommerce store may need to adhere to a bunch of different legal compliances and regulations. If you want to work as a freelancer with a visa in certain country, you need to pay attention.

In this article, we will take you through the basic legal considerations you must look into while launching your eCommerce business.

Securing the right license

As an eCommerce store owner, you are potentially competing with retail stores and other online shops in your area. As such, you need to secure the right licenses for it. 

In most jurisdictions, you will need a regular business license to operate an online store. If you are based in places like Dubai, you will have to secure an ‘eCommerce license’ from one of the many free zones located in the region. 

A common misconception with respect to securing a business license is assuming that you only need one if you have a registered online or physical shop. That is not necessarily true. In many jurisdictions across the world, you may be required to secure a license even if you are only selling your goods on Instagram or TikTok. 

Speak to a business lawyer to understand what kind of laws apply with respect to your jurisdiction.

Tax permits

When you sell goods to customers, you are mandated by governments to collect sales tax on their behalf. The kind of tax you collect depends on your jurisdiction and so there is no one answer to what kind of tax permits you need to sign up for. 

In the United States, you may be required to register with your state’s department of taxation for a permit. In the EU, eCommerce store owners may be required to collect VAT from customers based in the Eurozone.

Warehousing regulations

As an eCommerce store owner, you may not have to meet your customers face to face. However, the other parts of your supply chain still exist; including your warehouse.

A lot of startup eCommerce stores prefer outsourcing the stocking and delivery of their products to third-party players. However, if you are considering owning your warehouse, you could do so. In some countries like India, you will need to register your warehouse as an ‘additional place of business’ and this could impact your GST tax accounts. 

In the United States, the regulations depend on the type of goods sold. The USDA Warehouses Act or FDA regulations may come into play in case you sell agricultural, or food/drug related items. 

If you run your own warehouse, it is important to also secure the right kind of liability insurance to deal with worker injuries. Speak to an attorney who can help you cover your bases comprehensively for such scenarios. Platforms like ConsumerShield should help you find attorneys who are experienced in your local liability laws.

Regulated Products Compliance

If your eCommerce store sells regulated products such as health kits, supplements, or diagnostic tools like a saliva drug test you may be subject to additional legal and compliance requirements. These can include product registration, labeling regulations, and approval from health authorities, depending on your country or region. It's essential to research and follow these rules closely to avoid fines or product recalls.

Website

Website Requirements

As an online business, there are plenty of regulations and compliances that your eCommerce store must adhere to in order to operate. The first, and the most prominent among them is the Privacy Policy. You should be upfront about the different ways you track customer data. This includes the use of cookies, tracking their IP, buying behavior, cart abandonment, and so on. 

You should also clearly state your terms of service, and return/exchange policy. Failing to disclose your terms correctly puts you at the mercy of the local consumer watchdogs who can levy penalties on you for not honoring customer requirements. Many businesses are hiring a legal virtual assistant for their operations to save more costs on legal hurdles and streamline their operation.

If your business sells to customers in the European Union, you may also have to make sure that you are GDPR compliant.  While not equally well-known, the CCPA is the American equivalent and caters to privacy guidelines for American eCommerce stores. 

Finally, regardless of how big or small you are, if you run an eCommerce store that caters to the general public, you are legally required to adhere to the WCAG and ADA standards. These are web design standards that are meant to make your website easily accessible to disabled and handicapped users.

Failing to comply with these standards could open your site to lawsuits.

International Tariffs

Geopolitically, the world is quite volatile in recent times. This could mean ever changing laws and regulations with respect to products that are imported as well as exported. 

You are possibly immune from these changes if your product is manufactured completely within your country and is sold to people within the borders. 

However, if any component of your product is made outside the borders, or if you sell your product internationally, then you may have to navigate the complex international tariff systems. Failing to heed the right advice on this front could mean high tariffs on your products, goods stuck in ports or even being returned back to the country of origin. 

All this could mean thousands of dollars in potential losses. So, it is very vital to speak with an international taxation expert to understand the risks of your business. If need be, it is also a good idea to identify multiple suppliers from different countries so that you seamlessly alter between these suppliers in case of supply chain issues.

Wrapping up

As with any business, eCommerce businesses too need to adhere to various local and federal compliance and licensing regulations in order to operate lawfully. It is very important to seek the advice of professionals who can guide you through the process. Failure to do so can prove very expensive for your business - leading to high penalties, or in the worst case, even shutdown of your fledging business.