Online sales are a convenient and promising business, but they require compliance with a number of legal regulations. Regardless of whether you sell products through your own website, social networks, instant messengers or mobile applications, you must take into account the requirements of the law. In this article, we will consider the key legal aspects of online trading. You can learn more about the legal nuances of online business from our article “Online Business: Legal Advice” .
1. Business registration
To operate an online store legally, an entrepreneur must register the business in the appropriate form:
- A Private entrepreneur (sole proprietor) is an option for small businesses.
- A limited liability company (LLC) is a more suitable option for large-scale projects, as well as when attracting investors to a project.
Registration also affects the tax burden, the ability to enter into contracts and business protection.
It should be noted that registration is mandatory even if you sell handmade goods via Instagram or accept payment by card. Illegal business activities may result in fines from the tax authorities.
Business subject (KVED) codes: Select the appropriate activity codes (for example, 47.91 – “Retail trade carried out by mail order companies or via the Internet”).
2. Required documents for online sales
Any online store, be it a website, an Instagram page or sales via Telegram, must have properly executed legal documents, such as:
- Public offer agreement ( Public offer ) — an agreement offered by the store for conclusion to an unlimited number of persons, according to which the online store sells goods/services/works/services. Concluded by placing an order by the client.
- Privacy policy is an internal regulatory act that determines how an online store collects, stores and uses confidential information, including personal data of customers (in accordance with the Law “On the Protection of Personal Data” ).
- Documents confirming the quality of goods – certificates, declarations of conformity, if you sell products subject to certification (for example, cosmetics or electronics).
- User Agreement – defines the rights and obligations of users (online store), defines the terms of sale, delivery and return.
- Details for returning goods – in accordance with the Law “On the Protection of Consumer Rights”.
- Licenses – if you sell alcohol, medicines, electronic cigarettes, etc.
Without these documents, the entrepreneur risks receiving fines or lawsuits from buyers.
3. Taxes and accounting
Taxes are a mandatory part of online business. Even if you work via messengers and accept payments by card, the tax office may be interested in your income. Key points:
- A single tax for sole proprietors is convenient for small businesses, but requires compliance with income limits.
- VAT is relevant for large online stores with a turnover above the established threshold.
- Electronic checks (RRO/PRRO) – since 2022, most online sellers are required to issue fiscal checks, even when paying through payment systems.
Ignoring tax requirements may result in fines and additional taxes. We recommend keeping records of your income and consulting with an accountant.
More about taxes by following the link.
4. Intellectual property rights
Online sales often involve the use of content: product photos, logos, description texts. To avoid disputes:
- Register a trademark to protect your brand from being copied by competitors.
- Use licensed images – buy photos from stock sites or create your own to avoid copyright infringement.
- Sign contracts with contractors – if the design of the site or application is done by a freelancer, make sure that the rights to the result of the work are transferred to you.
Violating intellectual property can lead to social media accounts being blocked or lawsuits being filed. For example, using someone else’s logo without permission is a common mistake for beginners.
5. Using a franchise
Online sales can be scaled through franchising, or, conversely, you can buy a franchise and organize local online sales under the brand of a well-known project. Buying a franchise allows you to work under a well-known brand, using a ready-made business model.
A sample commercial franchise agreement can be found in our article “Commercial Franchise Agreement”).
6. Peculiarities of sales through marketplaces and social networks
When working with marketplaces such as Prom, Rozetka, OLX, Amazon, you need to take into account their rules and enter into appropriate agreements. Sales via Instagram, Facebook or Telegram require compliance with the same legal standards as a classic online store.
7. Additional aspects
- Consumer protection – it is important to know and comply with the requirements of the Law of Ukraine “On the Protection of Consumer Rights“, for example, on the right of buyers to return goods within 14 days (if they have not been used).
- International sales – when working with foreign clients, take into account customs duties and currency regulations, consider the need for customs clearance of goods and export regulations.
- Advertising – promotion in social networks or through Google Ads must comply with the Law of Ukraine “On Advertising” (for example, indicating the age for alcoholic products).
- Cybersecurity: Protecting the site from hacker attacks (according to the Law of Ukraine “On the Basic Principles of Ensuring Cybersecurity of Ukraine“).
Conclusion
Conducting online sales requires a comprehensive approach to legal security. Business registration, paperwork, intellectual property protection and tax accounting will help avoid problems and make online trading successful.
The Zilver Law Firm provides legal support to online businesses, helping with paperwork, trademark registration, intellectual property protection and other legal issues.
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