The internet has been a revolutionary force for business and commerce in recent times, offering greater availability for the public to start up a business, greater flexibility to adapt to changing markets and more opportunities to capitalise. It can be confusing to know what things you need to take care of when starting up an online business in the UK, but this article helps clear things up.
Despite the differences between a traditional business and an internet-enabled business, online businesses still adhere to the rules and regulations that govern all other businesses, and any online business that deals with trading, selling or offering a service must comply with these rules and regulations. Not as many regulations will apply if you are not in the business of selling or offering a service, but the ones that do are still important to follow.
Setting up a simple, non-limited business such as sole-trader (self-employed) is the quickest and most straightforward way to start up online, and the profits you get to keep, the paperwork requirements are small and there are fewer taxes involved, although you are not protected from losses and litigations.
Going down the limited route separates your personal livelihood from your business livelihood, protecting your personal assets if your business gets into trouble, though more paperwork and taxes such as Corporation and Capital Gains Tax will apply. Most new online businesses with owners that have a long-term plan and want personal security and privacy will register themselves as a private limited company, and this is done via registered office UK incorporation with Companies House.
No matter the route you take, you must study the Electronic Commerce Regulations (2002), the Acts which surround consumer protection laws and new laws which have arisen and are specific to online business. If you choose a simple route like sole-trader, then you must be well familiar with your legal obligations to minimise the risks of not being protected by corporation status. Either way, all regulations must be well-known and understood.
When a customer provides an online business with their custom, in the interests of consumer protection and taxation your company must be ‘visible’ in the public eye, which means owning and presenting a business registration number, presenting the business name, plus address and/or contact details where they apply. Your private address does not have to be made public – you can instead use a ‘service addresses.