Starting an E-Commerce Business

1. Who Is the Retailer?

The retailer seller should be identifiable for legal and tax purposes. The retailer can be an existing wholesale or retail business with a brick-and-mortar model. It can be an existing business entity (that has a proven administrative and operational structure) or a separate subsidiary (that protects the existing business from the risk and unpredictability of an untested business model). You need to select a business structure for your e-commerce business.

2. Is There a Product?

Determine if you are selling a physical product or a combination of physical and digital products.

Are You Manufacturing It?

If so, are you in compliance with licensing, regulations, and applicable laws to produce and sell your manufactured product?

Will you be set up to sell online business to business (manufacturer selling to wholesalers or retail businesses)? Or will you sell business to consumer? If you are not a manufacturer, how will you acquire the goods you intend to sell? Do you have manufacturer agreements and distribution agreements in place?

Do You Have a Digital Component? For example, a mobile application or e-book. If so, have you protected your intellectual property rights? Will your e-commerce website and store adequately support the hosting and downloads of the digital product? Will you have the required privacy and information security policies in place?

3. Where Are You Selling?

Determine the jurisdiction that your e-commerce store will serve. Will it only be in Canada or International?

If you want to sell internationally, will the website have a separate link for foreign territories, or will all the sales go through one central store? Have you determined the requirements of applicable Canadian and foreign laws? Such requirements as, but not limited to:

• Export controls;
•  Import regulations and cross-border compliances;
• Sales tax and income tax implications;
•  Product liability and safety;
• Consumer protection laws and privacy and data protection (including any requirements under the General Data Protection Regulation (EU) 2016/679).

4. You Need a Domain.

Have you selected and registered a domain name for the website from a third-party provider? A domain name is also known as a uniform resource locator or URL.

Potential consumers or businesses will use the unique name for the website to find your online business. This unique name or domain is translated to corresponding numerical internet protocol (IP) addresses by the internet domain name system (DNS). The DNS is administered by the Internet Corporation for Assigned Names and Numbers (ICANN).

5. You Also Need a Website.

Have you selected a web designer? Do you know what platform will host your website? Do you have a vision for your website and branding in place? Do you have Intellectual Property rights for the logo and/or name for your online business?

6. How Are You Marketing & Advertising?

Do you have a marketing and advertising strategy for your e-commerce business? Are you compliant with applicable laws and regulations for advertising your product? For example, the Competition Act contains both criminal and civil provisions to prevent anti-competitive practices in the marketplace.

The purpose of the Act is to maintain and encourage competition and innovation for the efficiency of the Canadian economy.

7. What Legal Materials Do You Need?

Do you know what consumer legal materials you will need for your e-commerce business? What online consumer-facing contracts and policies will you need for your particular business? For example, Website Terms and Conditions of Use and Website Privacy Policy.

Also, remember you must make sure you comply with the consumer protection law and Canada’s Anti-Spam legislation ( when you send commercial electronic messaging to customers such as promotional emails or texts).

8. Don’t Forget About Insurance.

Determine the type of adequate insurance you will need for your e-commerce business. Applicable coverage may be cyber insurance and general commercial insurance for product liability.

Please contact us for legal and accounting services with any of the items listed above. We are happy to support, equip and guide you through your entrepreneurial journey.