Tips for starting an online business

Updated: 19 December 2022

Starting an online business can be overwhelming. But it does not need to be that way. When you have a plan and know what legal areas you need to cover upfront, you simplify the process.

There is no need to do all the legal work at once. Although there are some legal areas you must cover right from the start.

By focusing on the key essential areas, it will save you time and money while covering the legal areas you need to.

Here are some tips for starting an online business and the legal areas you should cover right from the start.

1. Setting up the structure and business name setup

The first things you need to do is to set up the structure and register your business name.

Business structure

You need to decide on how to structure your business before starting to trade. In Australia you can choose from a company, sole trader, partnership or trust. Do not hesitate to talk to your accountant or lawyer for advice about which business structure is right for your situation.

Business name

Next register your business name if you are not going to trade under your own name.

So what is in a name? Why does it matter? The right business name is extremely important as you will build your business brand around this. So choose a name that reflects your business and will be easy for customers to recognise. It needs to be something no one else is using. It will also help if it is a name you like so you can build it into a strong brand.  

2. Website legal solutions

It is important to have terms and conditions and a privacy policy included on your website.

Terms and conditions

Your online terms and conditions set out the rules of your website. They form a legal and social contract with your website users. The terms and conditions set out the behaviour you expect from website users and that they agree to follow these when they continue using the website.

They also tell users what to expect from your website.

A good terms and conditions page will:

• Prevent misconduct. Outline the behaviours you expect from website users and the behaviours that are unacceptable such as harassment, spamming and posting content that is slanderous.
• Limit your liability exposure. By establishing terms and conditions for using your website you limit your exposure to lawsuits. It will also help to prevent your website being held liable for misinformation or any mistakes on the site.
• Establish content ownership. Your terms and conditions page can let users know your content is copyrighted and users cannot copy it without written permission.

Your terms and conditions will also cover:

• Disclaimers to limit your business’s liability
• Consequences for breaching your terms and conditions
• Delivery
• Intellectual property—copyright, trademarks
• Payment processes
• Refunds and exchanges
• Disputes
• Refusing service.

Privacy policy

A Privacy Policy is essential especially if your website collects, stores and processes user data. There is usually a link to the policy in the footer so that it is easily accessible to anyone who wants to read it.

It is a legal document and your Privacy Policy must outline how you will keep people’s information private or share it with third parties.

Tailor your privacy policy to suit your business and the information you collect. Keep in mind that the Office of the Australian Information Commissioner actually monitor website Privacy Policies, so it is important to get it right.

According to Australian law, all websites that collect data must have a Privacy Policy even if you only collect an email address on a contact form. At a minimum, your Privacy Policy should include:

• The personal information collected and stored, and how you use or disclose it.
• The reasons why and how you collect, store, disclose or use a person’s information.
• How someone can access the information you hold to correct it.
• How someone can make a complaint if they believe their information is being mishandled according to Australia’s Privacy Principles.
• How you will deal with any complaints you receive.
• If you are going to share information overseas, you need to add which countries.
• The name of your business and contact details.

And, if you are collecting information from customers or potential customers or subscribers that live in the European Union, you will need a GDPR compliant policy.

3. Financials

When selling online, you need good reporting systems. This will allow you to store data about your sales and it can feed into a good financial reporting system.

For example, if you have a Shopify e-commerce store, it makes sense to track your sales revenue through a linked accounting system like Xero or one of the others Shopify allows you to link to.

You will also want to check your financials from wherever you are, so use a cloud-based provider.

It is also important to track your revenue for tax reporting and to meet your tax obligations. So it is wise to talk with your accountant or lawyer about your tax obligations and what you need to do to avoid trouble with tax department.

4. Workers

If you have workers completing work for you, you will need an employee or contractor agreement.

Being 100% clear on the employment relationship upfront is essential. You do not want a contractor thinking they are an employee or vice versa because you want to avoid being liable for worker entitlements or a fair work claim for sham contracting. Make sure you have everything in writing, and signed by the worker.

5. Advice

These tips to starting an online business are a simple guide for most startup online businesses. As always, get advice if in doubt.

Accountants and lawyers are especially important. They can help you set up your online business correctly so you can focus on the important tasks.

As always, I wish you every success in your business ventures!