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.
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
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
- 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
- Subscribing to databases and journals that clearly outline upcoming legislative
- 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