How to Start an Online Business in Australia? Here’s A Video To Help You Make Sure You Complies With Australian Law And Help You Understand What’s Ahead On Your Business.
Start an Online Business with a Good Business Name
The first thing you need to do if you want to start an online business is you need to come up with a good online business name. This is the name that you will be trading under for your business online.
The things you should consider most are:
- your preferred name is free and hasn’t been taken
- suggest names that are easy to remember and easy to spell
- to focus on ensuring that the domain name is free. If you can get the same company name then great – as this adds to consistency to your brand.
We also suggest that names that describe your service are good names as they are descriptive and easy to spell. Names like ‘Ask a Contract Lawyer’ and ‘The Contract Company’ which are both easy to spell and are memorable. To check for all domain name registrations, try using a good website such GoDaddy.
If you’re going to run a Facebook, Twitter, or Youtube page, you should also check the availability of using the name that you want.
When it comes to company names, you need to have a look at the ASIC database. Make sure that the company name you want is not yet taken.
If your company name is not available, but the domain name is, choose the domain name that you want. It doesn’t matter as much about the company name but what important is getting the domain name that you want.
Lastly, whilst descriptive names are good they are not easy to trademark. In fact, the more descriptive a name is, the less chance you will have of getting a trademark over that name.
Should I form a company when I start an online business?
Incorporation is a good idea when you start an online business company. By incorporating, you create a separate legal entity. This means that it’s the company that gets sued, not you, (in case someone sues you in the future).
Incorporation has its downside as it will cost you a lot of money from filing fees to ASIC. This ranges from $500 to $600. You’ll also have to lodge a tax return yearly which can be expensive from around $300.
But it is still highly advisable to form a company when starting an online business for your protection.
There are other clever things you can do such as having the shares in the company owned by a trust. This can add a further layer of protection, but that is a little complicated for the purposes of this article.
Does my online business need a website?
Yes. That’s all there is to it!
Since you’re going to start an online business, you obviously need a good website. If you are inexperienced in website design, you most probably need to consider finding a website design you like for your online business as a template and then hire a website designer.
Whilst we aren’t advocating copying another website it does make website development easier if the website designer knows what sort of websites you like.
Also, you should put some rigor into finding a good website developer. Some secret sauce here is to use contractors who were based in other locations.
There’s plenty of websites out there such as Upwork and Freelancer where you can find good people with good skills. These contractors are a little bit cheaper from Australian rates.
But sometimes it is obvious you get what you pay for in terms of paying cheaper, you’ll often get a pretty average product. Australian website designers are very good ones with primo quality products. But there’s plenty of other options out there where you may get more bang for your buck. Just an idea.
What should I think about when getting a website built?
The key thing here when you start an online business is when you get a website designed and built for you. If you’re not doing it yourself, is that you want to make sure that the Intellectual Property (IP) rights (which will most often be copyright), belong to you.
You should put in place a website development agreement, where it’s clear in that agreement, that you own the IP that the third-party designer or developer creates for you.
Under the common law, which is law made by Australian judges when handing down cases, in the absence of a written contract, the legal position is that the third- party owns the IP.
However because you paid them to develop the website for you, you get a broad license to use that IP. Most likely you will want to own the IP and whatever is being developed for you because you’ve paid for it.
So you should put in place a contract that covers that off. It doesn’t have to be overly long and complex in terms of the IP provision at least, but you need to put it in writing to reverse the common law position.
Most often, the website designer’s sensitivity will not actually be to owning the IP. In other words, they won’t actually care so much about owning the IP. What they care about is the payment.
So most often, in a lot of website development and design agreements we’ve seen, it’s common that the designer owns the IP until such time as they’ve been paid. Once you pay them, then that act of payment triggers a transfer of the IP from them to you, which sounds fair. So you’ve paid them because they’ve done good work. And at that point in time, you then own the IP.
Should I put in place Website Terms and Conditions?
When you form your online business, you need to protect yourself legally through that website by sorting out legal documents such as: Terms and Conditions, Disclaimers, and Privacy Policies.
Privacy policies don’t actually protect you in the same way as terms and conditions, and disclaimers do.
Just note that never mislead your customers in what you’re selling, providing, doing, or saying in your business.
So that’s where the terms and conditions can really assist because you can clearly set out in those terms and conditions what you and/or your business is doing for your customers or clients.
What should be in my Website Terms and Conditions
What are Website Terms and Conditions? The easiest way to think about these are they are the terms and conditions that create a contract between visitors or users of your website and you.
So as soon as someone comes onto your website, you can make them be bound by your Terms and Conditions. So if they then go and transact or do something through your website, they are covered by your terms and conditions.
In other words, their use of the website is covered by the terms of your contract. That’s an important thing, and it’s a good thing for you as the person running or setting up your online business because it allows you to set the terms upon which you are willing to do business. That way, you can substantially lower your business risk.
So most terms and conditions are long and painful to draft, but they generally cover things like:
- rights and responsibilities of the customer and you (as the business running the website),
- what the website does in terms of compliance with legal requirements because there are, say, service warranty requirements under Australian consumer laws.
- But the big thing is that you as the business owner can limit your liability. You can substantially lower your business risk and you do that by putting a limitation of liability in the terms and conditions.
When do you need Website Terms and Conditions?
Well, as a simple rule, you need at least a very basic set of Terms and Conditions for every website you have.
However, you definitely need them if you’re selling goods or services and offering professional advice because when you start transacting and taking payment for goods or services through your website and/or offering professional advice.
If for instance, that advice turned out wrong, you definitely want a contract in place that protects you. That’s where Website Terms and Conditions come in. They are the terms and conditions or the contract that protects you.
Why do I need to have a Website Terms and Condition?
Terms and Conditions are essential to your website. This is for the main reason of protecting you when you start online business by setting out the terms contractually upon which you are willing to transact or do business with your online visitors.
However, there are other things that you can do with the Terms and Conditions. For instance, you can inform visitors on what your website does, what it will do, what it won’t do, what it includes, what it does not include, how you do things in terms of what is, or what are, your refund or shipping policies if you are selling goods.
You can also protect yourself and minimize your risk by doing things like limiting your liability.
Also, terms of conditions are great for meeting Australian regulatory requirements because there are things you have to do under the consumer legislation.
To the extent someone has a complaint or a dispute about the goods or services they have purchased from you, you can set out in your website terms and conditions how you will handle those complaints.
So to the extent, you caused a loss to a customer or visitor of your website or a client of your website, you can set out what your limitation of liability will be, which is a very important and very powerful thing to do.
1. email addresses
2. first names
3. last names
4. phone number, and
5. other materials.
You also do need to let people know if you’re going to store any of the information offshore, for example, if you use cloud-based services like Google Drive or Onedrive.
For example, if you are storing information in Google Drive, it has servers that are based all around the world. So there is a fairly good chance that your information will actually be housed on servers that are not in Australia.
You should as a second general principle only collect information that is necessary for your business.
There haven’t been many cases about a breach of privacy, but the Privacy Commissioner does receive a lot of complaints, and you can be forced to pay compensation.
Do I need a Website Disclaimer?
A website disclaimer is just a brief legal notice that states the general terms and conditions that a visitor to your website must agree on in order to access your website.
Website Disclaimers are good, but they’re just not as good as a fully comprehensive set of Website Terms and Conditions.
When do you need a Website Disclaimer?
You should have a Website Disclaimer from the moment you launch your website online. Because you will at least have some contractual protection. It’s a good stop-gap measure. It’s a good thing to do at first instance, but you should definitely move to a comprehensive set of Website Terms and Conditions. This is especially if you’re online business operates in a high-risk area (such as giving finance or investment advice). This also applies when you are taking money from clients (in return for goods or services).
How do Website Terms and Conditions work?
You need to make sure that your Website Terms and Conditions are easy to find. They should be accessible from every page of your website. Usually, most websites have them referred to at the bottom.
For added protection, you may require your website users to click or check a box ( which forms what is called a ‘clickwrap agreement’). This confirms that they are bound by the Website Terms and Conditions. In this case, the act of clicking the box formalizes the creation of the contract.
Under the common law, the Australian courts said that the more active steps you make a person step through to agree to those terms and conditions, then the more likely it will be that the terms and conditions will be binding on them.
So a tick box is good.
Even better is compelling someone to scroll to the bottom of the terms and conditions before they get the ability to tick a box.
Even better is to highlight key clauses in your agreement. Then have clients tick a box next to each clause as they go down the page. Then finally, tick a box at the very end saying that they’ve agreed to the Terms and Conditions.
So from those examples, you’ll see that the more active steps you make a client or customer go through, the more likely your terms and conditions will be found to be binding and enforceable, which is what you want.
Do you need to do that in all cases? No. Once again, it’s all about balancing risk with putting your customers or clients to a lot of effort.
The more money you’re taking or potentially generating through your website, or if you’re engaging in any high-risk practices, then you potentially want to compel people to go through those more onerous steps.
Will Website Terms and Conditions protect me from possible lawsuits?
There’s always a chance with any business you run anywhere, in any field, that you can be sued. This is because you cannot predict what a third-party is going to do.
But because you can’t predict what a third-party is going to do, you can put in place mitigations or steps to protect what you do.
Simply make sure you’ve got some comprehensive Website Terms and Conditions.
Make sure those Terms and Conditions are drafted in your favor.
Make sure you compel people to proactively accept the Terms and Conditions.
Then, even if someone sues you, you’ve done as much as you can possibly to protect yourself. That way, you’ve got a good chance of defending or beating any lawsuit.
Few guidelines on how to best limit lawsuits:
• Use clear legal documents on your site, so customers know their rights and responsibilities
• Make sure you live up to your side of the deal. Make sure your products and services are clear, accurate and that you deliver what you say you are selling
I hope you found this article helpful in setting up your online business in Australia. If you have any questions please get in touch.