Starting an online business can be a great way to give yourself more money, time, and freedom. However, eCommerce businesses are subject to often confusing laws and regulations which vary significantly between countries. But it’s important that you make sure you operate on the right side of the law.
In our recent blog, The eBay Sellers Guide to VAT, we covered everything eBay sellers need to know about VAT. So be sure to have a read of that if you’re an eBay seller unsure about VAT.
This blog will explain exactly what UK-based eCommerce retailers need to know when selling goods on eBay, Amazon, and Etsy, as well as from their own sites.
Online Businesses and the Law
The UK government has rules and regulations governing those owning and operating online businesses. These can be found at Gov.uk.
If you’re running your business from home, you may need get permissions from your mortgage provider of landlord, local planning office (if you’re planning to make changes to your home), or local council if you want to advertise outside your home or need a licence to run your business.
You may also need insurance since home insurance may not cover business stock. You can find an authorised insurer on the British Insurance Broker’s Association (BIBA) website.
You can claim a proportion of the cost of things like council tax, heating, lighting, phone calls, and broadband. Just include your business costs in your Self Assessment Tax Return if you’re a sole trader or part of a business partnership. You may also need to pay Capital Gains Tax on the part of the property used for your business if you sell from home.
You may have to pay business rates of the part of your property that you use for business. Whether you do or don’t will depend on the Valuation Office Agency have given a rateable value to a part of your home. You may qualify for small business rate relief if your property has a rateable value of £12,000 or less.
You will also have to manage health and safety as you would any other business.
If you own and run our own eCommerce website or use sell goods on a third-party marketplace (eBay, Amazon, Etsy, etc.) you will need to provide certain information for your customers.
Before an order is placed you must display information including:
- Your business name and contact details
- A description of your goods or services
- The price, including all taxes
- How a customer can pay
- Delivery arrangements, costs, and how long goods will take to arrive
- The minimum length of their contract
- Conditions for terminating contracts
- Information about the customer’s right to cancel within 14 days
Additionally, you must tell the customer that they will be responsible for paying for the return of goods if they cancel. If you don’t, they’re not liable for the cost.
After an order is placed and before the goods or services have been delivered you must contact your customer in writing. You must tell them:
- Details of what they have purchased
- The total cost
- Arrangements for delivery
- The minimum duration of any contract and arrangements for terminating the contract
- How and when they can cancel an order and who pays for returning goods
- An address where complaints can be sent
- Any guarantees or after-sales services you offer
- Conditions for terminating contracts
- Any helpline call charges that are more than calling an 01, 02, or 03 number, or a mobile or free number
- List the steps involved in a customer placing an order
- Acknowledge receipt of any orders electronically as soon as possible
- Take reasonable steps to allow customers to correct any errors in their order
- Let customers know what languages are available to them
- Make sure customers can store and reproduce your terms and conditions, i.e., these can be printed off
- Give your email address
- Give your VAT number
- Give clear prices and delivery costs for your products.
If you’re selling overseas, there are some additional rules, which you can view here.
eBay and the Law
You need to tell eBay that you’re operating as a business if you:
- Sell items that you have bought to resell
- Make items yourself and sell them, intending to make a profit
- Are a trading assistant
- Buy items for your business
It is an offense for a business to falsely represent itself as an individual. This means that, if you are operating as a business and do not register as a business seller with eBay, you will be breaking the law.
It is also up to you to ensure that your goods are of satisfactory quality, as described, and fit for purpose, as well as always including the correct pricing. And your listings cannot be misleading.
You can find out more about eBay and the law here.
Amazon and the Law
When you register to sell on Amazon, you are required to provide basic information about your business.
This information includes:
- Business Type
- Seller information (business display name, customer service email, customer service phone number, etc.)
- Place of establishment information (seller of record, legal name, VAT registration number, company representative, etc.)
You can find out more about what Amazon requires here.
Etsy and the Law
Etsy’s seller policy covers everything sellers need to know in regard to:
- Advertising policy
- Community policy
- Etsy whole seller policy
- Fees & Payment policy
- Intellectual property policy
- Seller referrals policy
- Prohibited items policy
- And shipping policy
If the taxman can prove you’re using Etsy to do “anything in the nature of trade” you will need to register your company with the HMRC. This will apply to most serious Etsy sellers.
Are you selling goods from your own site or on an online marketplace? If so, what are your legal concerns? Let us know with a comment.