Key Factors to Consider for Starting an eCommerce Business in Los Angeles
Are you planning on starting an eCommerce business in Los Angeles, CA? Here are some key factors you must take into account before starting.
- The existing problems of your target market
- The solutions your business can offer
- Where and how you will get the products for sale
- The process of handling the shipping
- How purchase transactions will be handled
Laws Regulating eCommerce Business in California
California Business and Professions Code Section 17538
According to California Business and Professions Code Section 17538 internet businesses are required to disclose to buyers, on screen or in writing:
- Business legal name
- Business address and contact information
- Refund and return policies
California Online Privacy Protection Act
According to California Online Privacy Protection Act, companies operating commercial websites are required to include a link to a Privacy Policy on their website.
The Privacy Policy must address the following:
- The type of personal information collected
- The way the website users can request changes to data collected
- The way the website operator will handle a “Do Not Track” request
- Whether or not the data collected is accessible to any third party
- Effective date of the Privacy Policy
- How users will be notified of changes to the Privacy Policy
Amazon Law: California Assembly Bill No 28
Federal law states that businesses must collect sales tax for internet transactions involving the sale of most goods to customers where the business has a physical presence. However, California law requires larger ecommerce businesses to collect sales tax in California even if they don’t have a presence in California. This regulation comes from the “Amazon Law,” according to which an out-of-state retailer must collect sales tax from California customers in case:
- The seller has an agreement with a person located in California to pay for customer referrals got via a link on the California seller’s website
- The seller’s total cumulative sales to purchasers in California exceed $10,000 during the previous twelve months.
- The seller has total cumulative sales to purchasers in California above $1 million.
California Automatic Renewal Law
According to California’s updated Auto-Renewal Law (Business and Professions Code Section 17600) online sellers are required to make their terms even clearer in transactions that involve an auto-renewal. E-commerce sellers who are doing business in California are required to allow online cancellation of auto-renewing memberships or recurring purchases that were initiated online. Specifically, section 17602(c) provides:
“A consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online, which may include a termination email, formatted and provided by the business that a consumer can send to the business without additional information.”
California Auto-Renewal Law also requires a seller who provides an automatic offer that includes a promotional, trial or a gift, to notify its consumers about how to cancel the auto-renewal before they are charged. The law also includes other requirements that online sellers must be aware of before implementing this type of program.
License for Operating Commerce Business in Los Angeles
All companies operating in Los Angeles are required to obtain a California business license, no matter whether they sell online or have a physical storefront. If you decide to operate without a valid license, you could be subject to heavy fines. You can be even forced to stop operations until the paperwork is filed.
What Do You Need for Obtaining an eCommerce Business License in Los Angeles?
To apply for a business license in Los Angeles, you typically need to:
- Determine your company’s legal structure, i.e. partnership, sole proprietorship, LLC, etc.
- Provide a complete statement on business activities
- Show your sales tax license, which can be obtained from your state agency
- Have all necessary inspections done
Do you have any specific questions involved with starting an eCommerce business in Los Angeles? Our business lawyers at KAASS Law can provide you with specific answers and information based on your unique situation.