Steps and Tips
When creating a new business, many entrepreneurs are initially attracted to the online business model as an easy way to enter the market and begin bringing their aspirations to life. The lack of a requirement for a physical presence, and therefore lower overheads, can be an easy idea to fall in love with for the cash strapped start up. However, while an online business may be free of some of the more cumbersome obligations of a traditional business, there are still certain requirements and regulations that must be complied with in order to run it successfully.
As with any business, what you will need depends greatly on the type of business and the industry it operates within. With that in mind, below is an explanation of some of the more common legal documents and requirements.
Registering a Business Name
A business name is the name or title under which an entity or person conducts a business. When starting an online business your major concerns should be that:
- The name is not already taken;
- The domain and business name are both available;
- The name is available on social media platforms (such as Twitter, Facebook, etc);
- The surrounding domain names (“.com” “.com.au” “.net” etc.) and misspelled or hyphenated versions are available – it is recommended that these all be registered or purchased to avoid competitors attempting to poach online traffic.
Unless you plan on operating as a sole proprietor under your own name, or you fall under one of the other exemptions, you will need to register your business name with the Australian Securities and Investments Commission (“ASIC”).
It is important to note for the purposes of intellectual property protection that the registration of a business name is separate to registering a trade mark over the business name.
Website Design
A website is the most crucial aspect of an online business as it is the interface between the business and its customer base, so it is important that all of the key legal issues surrounding it are resolved early on. Depending on the skill set of the proprietor, most of the time a website developer will need to be engaged to create the website for the business. A Website Development Agreement is used to outline the terms and conditions under which a website developer is engaged. When entering into a Website Development Agreement your major concerns should be that:
- The developer is clear on what you require for your website;
- You are clear on who owns the intellectual property – it is highly recommended that you retain the intellectual property rights and own the content that has been developed;
- You are indemnified for the work on your site – that is, you are not liable if the developer uses anything that already appears on another site.
Once your website is up and running you will then need to determine which legal documents should be included on your website. While this may differ depending on the type of business you are running, generally most websites will have Website Terms and Conditions, a Privacy Policy, and a Disclaimer.
Website Privacy Policy
A Privacy Policy is a document outlining how you collect, store and use a customer’s personal data. If your website collects any form of information from a customer then it is a requirement under the Privacy Act 1988 that you have a Privacy Policy. With a Privacy Policy your major concerns should be that you have properly informed customers of:
- What personal information you collect;
- How you intend to use the information;
- How you will store the information collected, and what security measures you have in place to protect it.
Website Disclaimer
A Website Disclaimer is a short notice that outlines to customers the general terms of the website that must be agreed to before entering (e.g. asking for confirmation that the customer is over 18, etc.). The purpose of a disclaimer is to limit your liability as the owner in relation to the use and content of the website. With a Website Disclaimer your major concerns should be that your liability is limited with regards to:
- Defamation;
- Copyright infringement;
- Viruses and malware;
- Content accuracy.
It should be noted that a Website Disclaimer will not completely free you of any liability, however, it is still an important document as it limits the scope in which you may be found liable for any damage, and deters customers from making frivolous claims against you.
Website Terms and Conditions
While a Website Disclaimer will go some way to limiting your liability and informing customers about the general terms of the site, it is important that you have clear and detailed Terms and Conditions accessible. Terms and Conditions are more personal between you and the specific customer, and will outline in more detail the rights, responsibilities and rules governing your business practices and the use of the website. Australian Competition and Consumer Law states that all businesses providing goods and services must warrant to their customers that the goods and services are as described, and provide a refund if they are not. The details of how a business will comply with this requirement should be outlined in the Terms and Conditions accessible for customers and displayed on the site. With Terms and Conditions your major concerns should be that you properly inform customers about:
- Your business practices;
- Your terms of service; and
- The use and limitations of the website.
It is also important that through your Terms and Conditions you address other areas such as your intellectual property (in order to protect from theft) and any regulatory standards you may have to meet in order to limit your liability in relation to your services or products.
For advice and assistance with setting up your online business or for further information regarding the requirements and issues surrounding starting and operating an online business please contact Mark Minarelli.
