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Solely Online Businesses have Significant Advantages

Businesses that solely operate online have several distinct advantages from their brick-and-mortar counterparts. Three advantages are:

  • They are able to reach consumers all over the world.
  • They can focus their online marketing strategies to target very specific regions.
  • Online businesses benefit from much lower overhead costs.
The future shows e-retailing is promising

These advantages have reduced the barriers to become a business owner, and are key contributors to the increased amount of competition and increased variety of products available to consumers. Online businesses have benefits for the business owner and the consumer, which is why it is quickly becoming the most preferred method of shopping for goods and services.

Solely Online Businesses have Unique Challenges

Conducting your business online comes with legal considerations that wouldn’t necessarily be the case when operating brick-and-mortar stores. These legal considerations are typically in the areas of privacy, security, and taxation; each of which can be difficult to navigate when employers and managers are unfamiliar with the guidelines protecting online consumers. It is the responsibility of e-businesses to:

  • Protect your customer’s privacy
  • Obey laws covering digital rights, and
  • Pay attention to state and federal tax codes that apply for online transactions.

The Changing Regulatory Environment is Focusing on Online Business and e-Commerce

E-commerce sales totals

Almost all businesses collect and store their customer’s personal information. Depending on the type of information that your company collects, you may be subject to the federal and state legislation that protects private information. These regulatory policies are enforced to protect online shopper’s information and ensure that online businesses have the proper safeguards protecting consumer information. Companies that fail to establish these security guidelines or fail to adhere to the privacy of information regulations are exposing their company to additional liabilities such as fines and penalties.

Additionally, state and local governments are beginning to adapt their tax codes to account for taxable products and services sold online. In the past, some states didn’t have effective online tax codes and ultimately let the business force the tax responsibility onto the consumer. This is changing. The Marketplace Fairness Act has been proposed to ensure that the consumer does not have the burden of reporting taxes, and that responsibility will lay solely on the online business.

The two examples above represent existing and future laws that will play a role in shaping online commerce. They do not begin to address the additional requirements for security breaches and hacks that online businesses will be exposed to in the future. Instead, they are merely examples of the regulatory policies that affect online businesses. Companies that solely operate in the online environment should minimize their exposure to legislative liabilities in order to protect the long-term success of their business.

How to protect your company from regulatory oversight

Business owners are obligated to find ways to navigate the regulatory requirements of entrepreneurship. So here are some free avenues for online business owners to find the information they need to comply with best business practices in the online environment:

  • Government agencies (like the Small Business Association) and organizations are typically non-biased avenues to  research upcoming legislative changes.
  • Collaboration with other online businesses can be one of the more effective ways to find information relevant to your  industry. Other business owners deal with similar obstacles when it comes to regulatory oversight.

As your online business grows, your free-time starts to diminish. This makes actively researching the internet a more challenging task to accomplish. Therefore, companies pay for services that simplify navigating online business legislation. Some useful options are:

  • Subscribing to databases and journals that clearly outline upcoming legislative agendas.
  • Seeking advice from experts in the field, such as e-commerce litigators, computer security experts, taxation specialists,  and other experts in online business operations.
  • Finally, entering into partnerships with human resources outsourcing firms and compliance firms ensures that your  company has the resources to proactively manage the legislative environment.