To start an online store in Australia one has to get the registrations in order, pick a business structure, be on top of tax and adhere to the laws around consumer, privacy and marketing issues. There are times when you will want industry licences, product approvals and well defined website policies in place prior to your first sale.
This guide is intended to show you the way to put in place online product sales and avoid the error of regarding your site as “just a website”. It also explains the key steps involved in establishing online product sales. When there is an exchange of money, the law for Australian online stores comes into play. Simon Redcliffe puts forward what is important, where people tend to go wrong and the things to have in order before you launch.
What Rules Apply To Online Stores?
In the eyes of the law an online store is much like any other Australian business. It makes no difference if a customer comes to you via your website, a marketplace or Instagram; your responsibilities remain.
Obligations will be dictated by your turnover, the make up of your business, whether you have staff, and what and where you are selling. You can expect more of a small shop dealing in handmade items than a concern that imports cosmetics, has children’s products or is amassing health data.
Core Requirements At A Glance
| Area | What To Check | Why It Matters |
|---|---|---|
| Business setup | Structure, business name and ABN registration | For tax and banking purposes and to identify the business |
| Tax | Employee obligations, invoices, records, income tax and GST | So as to not incur an unexpected tax debt or report incorrectly |
| Products | Permits, licences, labelling and safety standards | Certain items are subject to additional rules |
| Customers | Refunds, pricing, delivery and the Australian Consumer Law | To head off disputes and put consumer rights in order |
| Website | Shipping policy, terms of sale, conditions and privacy policy | Sets out how information is dealt with and the store runs |
| Marketing | Unsubscribe option, sender ID and consent | A must for commercial SMS and email |
Use the table as a point of reference but do not let it stand in for the rules of your state or product. Regulatory details and ATO thresholds are prone to change so best to verify before going live.
Choose A Business Structure
How you set up the business has implications for tax, administration and liability as well as the prospect of taking on partners or investors. Do not be in a hurry because the form is easy to fill in, it could prove a nuisance to put right down the track.
The sole trader is by far the simplest. You are in control and file your business income with your individual return, though you are left to answer for any claims or debts. There is value in that but it leaves personal assets open.
Sole Trader Or Company?
With a company you have a distinct legal entity. More record-keeping and annual obligations are to be had, but it offers an alternative in the way of tax and liability. Be aware that putting a company on paper is no shield against all claims, especially in the event of personal guarantees or impropriety.
Then there is the partnership for two or more, or a trust run by a trustee. Both can have their complications on the tax and legal front and are not something to decide on from a quick chart.
Register Your ABN And Name
Dealing with the ATO, government, suppliers or customers calls for an Australian Business Number (ABN) to put a face on the business. While you do not need one just for the sake of making an online sale, most enterprises will apply via the Australian Business Register.
It is a matter of whether what you are doing is a proper business with commercial intent, regular transactions and advertising, as opposed to an odd private sale.
Business Names And Registrations
Trading under anything other than your own or the company name means you should register a business name. That does not confer exclusive ownership. Put some time in to check trade marks with IP Australia before you put your money into signs or packaging.
Registration for an online business in Australia is not a one off affair. Between the ABN, GST and company or state/territory registrations, make a list of what is needed for your particular case rather than think one form is enough.
Do I need an ABN for an online store? There are risks in running a bona fide business and not attending to your ABN and tax obligations. An ABN will be called for in some instances, such as when you want to do business with wholesalers or put in place an account for the business, or to prevent tax being taken out of payments.
Handle GST And Tax Correctly
Australia’s Goods and Services Tax is 10 per cent on the bulk of goods and services put on sale. Once you are at $75,000 in GST turnover, be it actual or projected, registration is usually mandatory (certain transport providers and organisations have their own set of rules).
For an Australian online store though, it is not as straightforward as tacking on 10 per cent to the price. One has to determine if products are taxable, what can be claimed in GST credits, how shipping is handled and if any marketplace dealings affect reporting.
Records, Invoices And Employees
You should have records in order for sales, stock, expenses, the bank and GST. Where you are registered for GST, put out tax invoices as needed and file activity statements in due course. Put prices in AUD and make sure any other fees are evident to the customer at checkout.
When it comes to employees, look into superannuation, PAYG withholding, workers compensation and payroll tax. Be wary of the old trap of having someone under your control as an employee but labelling them a contractor; that does not absolve you of your obligations.
Before publishing your prices, consult the ATO’s business guidance on what is required by way of record-keeping and registration.
Check Licences And Product Rules
What you sell will dictate the licences and permits an online store in Australia must have. You will need more sign-off from the authorities for food, therapeutic or children’s goods, alcohol and imported electricals than a clothing outlet would.
Look at the requirements at federal, state and local level before you put a product up for sale. The Australian Business Licence and Information Service is a good resource to see what industry permits apply to your location and activities.
Product Safety Comes First
Under the Australian Consumer Law there are safety rules, standards and the like. The fact that another site is selling it or your supplier put it in front of you is no excuse to put unsafe goods on the market.
Get proof of compliance from suppliers and have batch and supplier records to hand. Should a product result in injury or damage you need to know where you stand. With imports in particular take care, as the onus can still be on the Australian seller even if the manufacturer is abroad.
Examine the instructions, age limits, warnings and ingredients. With items such as medical or cosmetic products, or anything for children, get specialist input prior to launch. What is a cheap item can cost you dear once a lawyer or insurer is in the picture.
Follow Australian Consumer Law
Most of the time the Australian Consumer Law is in force for businesses offering goods and services to the consumer here. It is about remedies for faulty wares, product safety, guarantees and putting a stop to unfair or misleading practices.
Be accurate in your advertising and the way you describe a product, in photos and reviews and delivery commitments. Unless you have the evidence to back it up, do not call something “organic”, “recyclable” or “Australian made”.
Consumer Guarantees And Remedies
A product has to be fit for purpose, of acceptable quality and come with clear title. The same goes for services which must be done with reasonable skill. In the event of a major fault the customer may cancel or seek a replacement or refund. For something minor you will normally be able to put it right.
Putting up a “no refunds” notice is no way to negate those guarantees. You can have procedures for inspection or return postage so long as they are reasonable and do not infringe on a customer’s rights.
Write Clear Store Policies
Policies are there to make things plain to the customer ahead of payment and to allow you to act consistently over a damaged product or one that is lost in transit. But do not lift a policy off an overseas site thinking it will stand up in Australia; the references to foreign courts or currency will not accord with the ACL.
Refunds Shipping And Pricing
On your refund page you should be clear on the difference between a change of mind and a remedy for an unsuitable or misdescribed product. Lay out how the refund is made, processing times and who covers the postage. As for shipping, set out the costs, dispatch and tracking, and what happens with returns. If your supplier needs a week to pack an order, do not be promising next-day delivery.
Be precise with your pricing. Put the total minimum price on display, be upfront about any fees that cannot be avoided and leave optional extras to be just that. There is no room for a low headline price to be offset by charges at the point of payment; it is a recipe for compliance issues.
Terms And Intellectual Property
Your terms of sale or conditions must address the full scope of an order from payment and delivery to cancellations, returns, dispute resolution and the like. Make sure they do not in any way seek to take away what Australian law affords the consumer.
As for intellectual property, check trade marks, get the go ahead for photographs and put in place the necessary licences for software, fonts and music. Do not assume you can make use of your supplier’s product image. Have written proof of all permissions and licences.
Protect Customer Information
You have privacy obligations once your store has names, addresses, account data, browsing history, marketing preferences or payment information. The Privacy Act 1988 will apply to some smaller businesses by virtue of their activities as well as those with turnover over the threshold. But good business practice dictates responsible handling of information even where the Act is not strictly in play. A customer does not relish having his phone number or purchase history made free-for-all.
Publish A Useful Privacy Policy
Lay out in your policy the nature of the information you collect and why, how it is used and by whom, if it goes overseas and the means for a customer to access, correct or put in a complaint.
For security, employ strong passwords, multi-factor authentication and limit what staff can see. Reputable payment providers are to be used and one should know what they process for you. Storing full card details is something to be done only with the requisite specialist systems and obligations.
Get Email Consent Correctly
Commercial email and SMS in Australia fall under the Spam Act 2003. In most cases consent is required of you, as is a sender identification and an unsubscribe facility that works without fuss. Retain evidence of this, particularly when a customer puts a tick in the marketing box at checkout. Do not make acceptance of the terms of sale a pre-condition for marketing. While a receipt is transactional, tacking on a sales promotion alters the message.
Launch With A Compliance Checklist
Put the customer journey through its paces on both computer and phone prior to launch. Go to the product page, the cart, the payment screen, the confirmation and dispatch emails, try to make a return or file a complaint. You will find the gremlins there.
- Make sure you have the right structure in place and are clear on personal liability, tax and insurance.
- An ABN and business name registration should be applied for where called for.
- Look into GST, income tax, invoicing, records and superannuation for employees.
- Before you list products verify any industry permits, labelling and safety requirements.
- See that descriptions, photos, reviews and your promises on price and delivery are without fault.
- Post your policies: terms and conditions, privacy, shipping and refund.
- Test everything from the payment methods to the unsubscribe function.
- Put in place a workable dispute resolution process and the insurance to match.
Should preparation time be down to a day, concentrate on the legality of the product, consumer guarantees, returns and the security of payments. A logo can be put off, but not a misleading price or an unsafe item.
Frequently Asked Questions
When making the transition from concept to an actual checkout page these are the questions that tend to arise. The answers below are brief, though your particular business structure or product line could alter matters.
What Do You Need To Start An Online Business In Australia?
Typically you will want an ABN (if appropriate), a compliant set of website policies, lawful products, the right processes for payment and delivery, tax registrations and possibly the odd licence or permit along with insurance.
Do I Need An ABN For An Online Store?
Not per se. It is more pertinent to an enterprise or business than the occasional private sale. For regular profit making you would do well to consult the Australian Taxation Office and the Australian Business Register as to your standing.
How Do You Set Up An Online Store In Australia?
It is a matter of registering the business and choosing a structure, then putting in place tax and payment procedures and policies that are in order. Secure the customer’s information and run tests on the ordering and returns side of things. Nothing gets launched until the remedies, prices and delivery are spot on.
What Is The Most Profitable Online Business To Start In Australia?
One cannot give a definitive answer. You may have a high margin product but still be out of pocket once you factor in advertising, competition, product liability and the cost of compliance and refunds.
Does Every Store Need A Refund Policy?
We would recommend having one in writing, yet it is no substitute for consumer guarantees. Under the Australian Consumer Law you are obliged to deal with anything faulty or misdescribed, even if you have reasonable conditions for a change of mind.
Launch With Fewer Surprises
Compliance is not some paperwork to be added on later, it is part of the store. Be honest in your product descriptions, register as you should and make delivery and refunds a simple affair.
Simon Redcliffe would have it this way: test the store as a customer before you open for business. If the route to payment or return is at all confusing, or the promise and price are not clear, put it right now. It is less expensive in the long run than having to provide an explanation afterwards.
