Selling online is easy, right? When it comes to eCommerce guidelines, the answer is complicated: yes and no. While our digital world has made it easier than ever to set up an online store and sell products, there are specific rules and regulations that need to be followed.
Knowing your applicable eCommerce guidelines can easily mean the difference between a thriving eCommerce operation and a never-ending series of headaches and hassles.
Cut yourself a break by picking up the right knowledge as you prepare to open your online store. With the correct tax language in place, PCI compliant-payment systems secured, and detailed terms and conditions, you’ll be ready to build a successful eCommerce business.
eCommerce guidelines for taxes
Tax laws can be confusing as they relate to eCommerce guidelines because they’re different from one region to the next. As Katey Ferenzi, writer for BigCommerce, explains:
“For instance, if you are located in New York and want to sell clothing, know that clothing is taxed in your state. In Britain, VAT tax applies to all non-essential goods. In California, items you sell in plastic bottles will carry a $0.11 recycling free, in addition to other taxes.”
What does this mean for selling online? There are a number of implications, including:
Registering for a tax license
This one comes down to whether you have a large enough presence in any U.S. state to be a sales tax nexus. Basically, if you have property, employees (including yourself), inventory — or even third-party agents — based in a state, you likely need to file for that state’s tax license, and then collect (and file) sales tax there.
Charging the right amount of sales tax
You need to charge sellers the correct amount of sales tax — and know, among other things, the difference between origin and and destination-based sales tax. This starts with the law in the state where you’re based. Some states — Arizona, California, Illinois, Mississippi, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Texas, Utah and Virginia — require charging the sales tax rate of the state where the seller is located. The rest of U.S. states (including the District of Columbia) require you to base sales tax on where the shipment is headed.
Automating tax configuration
If the above discussions left you scratching your head, fear not. There are a number of platforms that streamline eCommerce guidelines for sales tax by automatically applying the right charge. For example, if you’re using WordPress for your online store, technology like WooCommerce can automate much of what we’ve just discussed.
Whether you’re selling on your own site or a platform like Amazon, this is an extremely complicated piece of your eCommerce guidelines. As such, it’s wise to speak with a retail tax professional who can make sure you’re set up for success, avoiding any penalties or fees for incorrect taxing.
Consumer laws and rights
Rules and regulations are in place to protect consumers from poor business practices and allow them to fight back. While these laws are extensive and in many cases, confusing and hard to understand, you can mitigate much of the risk with your “terms and conditions,” which consumers agree to when purchasing your product.
Terms and conditions are essential for protecting your business — and possibly personal interests — when selling online.
In an ideal world, you would never encounter disputes or difficulties in eCommerce. In the real world, it’s an absolute guarantee with scale, according to the guide Ecommerce Legal Legals and Law.
The guide suggestions five important clauses to include:
- Consumer contract regulations — In a sense, your online sale is a contract between you and the customer. And, as such, there can be eCommerce guidelines for personal and business information in these consumer contracts. Be sure to follow them.
- Liability limitations — Your online sale can directly or indirectly influence not-too-great situations. It’s important to put a limit on your liability and clearly state it.
- Return policy — If a customer decides they need to return something they purchased from you online, it’s critical to indicate what happens next. Make sure you’re transparent with eCommerce guidelines for stuff like who pays for return shipping and any other scenarios you can dream up.
- Jurisdiction — Some situations can only be resolved by looking to applicable laws, so it’s important you know where to turn. With international sales as common as they are, you need to indicate, up front, whose laws you’re using to resolve disputes.
- Shipping and delivery specifics — If you use a specific carrier or have eCommerce guidelines for, say, shipping to P.O. boxes, make sure customers can find that information in your terms and conditions.
And you can always head to the U.S. Federal Trade Commission to stay up-to-date on these rules and regulations, and learn more about what your responsibilities are as an online retailer.
Shipping rules and regulations
Shipping rules regulate what you can and can’t ship, how things need to be packaged, and more. If you’re shipping internationally, the FTC outlines some basic eCommerce guidelines that sellers should follow. These include fair marketing practices, clear and accessible information about the business and your goods, and a full explanation of costs and transaction conditions. Get the full list of requirements at the from the FTC.
Another detail to consider is what you can and can’t ship, which depends on who you’re shipping with.
For example, the USPS has their list of shipping restrictions, but other companies — like UPS or FedEx — might be okay sending these items for you instead. In some cases, you can sign specific paperwork that will allow you to ship otherwise-unallowed items, as well.
PCI compliance
PCI compliance refers to following standards set by the Payment Card Industry Security Standards Council for data security standards (DSS), as well as eCommerce guidelines for ensuring your customers data and credit card information is being used responsibly.
The account data you need to protect is broken into two sections: cardholder data and sensitive authentication data. The latter refers to the information on the card — card number, security code, pins, etc.
Most eCommerce platforms have this compliance built in, so you don’t need to worry about anything. However, when working with software like Magento or BigCommerce, you might need to hire someone to ensure you’re compliant; these platforms aren’t always ready for out-of-the-box use.
For an easy-to-understand breakdown of these rules and regulations, head to PCI’s Maintaining Payment Security publication. They use graphics and outlines to make this understandable for even the newest sellers.
Start selling online
Keep these eCommerce guidelines and regulations in mind before you add your first product for sale online. While many merchant platforms deal with them for you, it’s important to do your due diligence. There are penalties associated with non-compliance for all of these rules and regulations, including fines, replacement costs, and expensive forensic audits.
Don’t get started on the wrong foot. Keep these details in mind so you can build the flourishing and successful eCommerce business you’ve envisioned.
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The above content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
