3 Tips To Running A Successful Online Business
Entrepreneurs from all over the world are discovering the many benefits of operating as an online business
. Mainly, an online business tends to require a lesser start-up cost, than the same type of business that operates at a physical location. Therefore, many business owners are enthusiastic about starting a business that they enjoy, without breaking the bank.Although, an online business is a great way to offer the best in products and services, many entrepreneurs forget that there are legal considerations that are unique to online businesses. Particularly, when dealing with a business that operates online, many should be aware that there are legal issues concerning privacy, advertising and marketing, and taxation.
Privacy Protection
A business that is involved in e-commerce should assume reasonable measures in protecting their customer's personal information. In order to finalize transactions, many businesses have to collect or share sensitive data about their customer. Such sensitive data can consist of name, address, date of birth, social security number, and credit card information. Therefore, the Federal Trade Commission (FTC) regulates how information is collected, used, shared, and secured in order to protect the consumer. They are also the regulating body that prohibits unfair or unscrupulous practices from occurring.
Also, not only should an online business seek to protect the information collected from their customer, but they should also let their customers know that their information is protected. If a customer is unsure about the protection of their information, they will usually shop somewhere else. To prevent this, you should employ the following:
Consistently review all of the customer files that you have saved on your computer.
Keep only the customer files that you need.
Install a software program that will protect all files that are still in your computer system.
Properly dispose of all customer files that you don't use or need.
Collecting Sales Tax
Collection of sales tax is a pretty straightforward concept when it comes to a business selling products out of a physical location. Basically, the retail store will simply collect both local and sales taxes from their customers, based on the state where the transaction occurred. Easy enough, right? On the other hand, business owners who own retail stores online have the ability to sell to any one, in any state. So the question is, how do you know which state tax should be charged to the customer?
The answer to this question came from a Supreme Court ruling in 1992 that states that tax will be collected and based on the state that the online business has a physical presence. If you do not have a physical presence such as an office, warehouse, or store location, then you don't have to collect state taxes. However, you should check your local states office to determine the exact definition of "physical presence" to ensure that your particular online business is in compliance with all state and federal laws.
Also, many online businesses will just install the shopping cart software on their websites so that the collection of taxes is handled through this service. Tax information is usually programmed in the software so that you don't have to calculate it yourself.
Advertising and Marketing
Like many online businesses, you will conduct most of your marketing and advertising online. But, before you do, you need to learn that there are federal and state laws that prohibit certain marketing practices. Throughout the years, unscrupulous businesses begin performing shady advertising practices such as spam and constant pop-up screens. Therefore, there have been rules and regulations that have to be followed in order to prevent this from happening.
Moreover, you should make sure that the following measures are in place when dealing with online marketing measures:
When emailing prospective clients, make sure you have an "unsubscribe link" on the email.
Don't send emails everyday, as many will consider it as SPAM.
If you bought your email list from a third-party, make sure that they did not obtain this list illegally.
Explain to your prospective customer the reason that they are getting the email.
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