Reading time: 6 minutes

When you start an online business, you create a new opportunity for successful entrepreneurship. You can take advantage of the continually developing digital landscape to broach new markets and reach customers that you perhaps could not have accessed previously. Without a physical store, you also have the ease of being able to work from almost anywhere you want. However, starting an online business is not a task you should undertake lightly as it requires careful preparation. Therefore, for some guidance, this article will go through six things you should check before you start an online business in New Zealand.

1. Prepare What You Are Selling

Before you start anything, you need to figure out: 

  • what you are selling;
  • who you are going to sell it to; and
  • whether there is a demand in the market for your idea.

 If you are selling products, find out how you can sustainably source them or their materials and what contractors you need to engage. If you sell services, determine whether you need any relevant licences or experience to provide those services. Some areas translate more easily to online business than others do, so it is crucial that you plan ahead to determine how you can get your idea off the ground.

For example, if you want to start an online dropshipping business, set aside time to determine what manufacturers you want to engage, what products you want to sell, and how you will facilitate the sale process. For this area, small and easily shippable items usually translate better for successful online sales and delivery.

2. Choosing an Appropriate Business Structure

Check that you have chosen the most appropriate business structure. Indeed, you can change your business structure after you begin trading as you wish, but it can be a lengthy and unwieldy process. 

Therefore, it is easier if you choose an appropriate business structure at the outset, to save future hassle. For instance, if your online business is a solo operation and you do not plan to grow very much, a sole trader structure may be appropriate for you. However, if a group of you are operating the business and you have plans for future growth, incorporating your online business as a company may be more beneficial. Depending on what you choose, you will need to:

  • register an NZBN;
  • register your company; and
  • get an IRD number.

3. Determine Where You Are Selling

You may not operate from a physical store, but you do operate from a digital placeholder online. Before you plan too much, you need to decide what form that digital placeholder will take. You can run your business from:

These vary in how much control you have over where you sell your goods or services from. In particular, when you make your own website, your website can operate according to your rules, and there are usually no terms and conditions you need to abide by. E-Commerce platforms allow for much flexibility, and they provide useful services, but you have to comply with their contract terms. Conversely, setting up a shop on an online marketplace is very straightforward, and you gain already established customers but lose the personalisation you may gain from the other two. 

Tip: It may be a good idea to set up shop both on your own website (or e-Commerce platform) and an online marketplace to take advantage of the benefits of both.

4. Registering a Unique Domain Name and Relevant IP

Depending on where you want to operate online, you will need to register a domain name. A domain name is the website address your customers will type into their browser URL to find your online business, much like a physical address. The key here is to choose a unique domain name that will:

  • help your customers remember your business;
  • be easy to recall and search up later; and
  • not be similar enough to another business to confuse the two of you.

The same considerations apply to registering your important intellectual property, such as trade marks and designs. If customers confuse your business with another, then this can negatively impact your market sales. Therefore, before you decide on your branding or domain name, use a tool like ONEcheck to determine what branding and ideas already exist.

5. Prepare Important Legal Documents

When operating online, you need to define your contractual relationship with your customers and protect your business. You also need to let them know how you protect their privacy and other relevant information. Before you launch your online site, be sure that you have the following to achieve these tasks:

  • terms and conditions;
  • website terms of use; and
  • a privacy policy.

Tip: Get customers to check a tickbox confirming their acceptance of important documents.

You should also confirm contracts with important third parties, such as:

  • non-disclosure agreements;
  • supplier/manufacturer agreements; and
  • courier contracts.

6. Look Into What Laws Apply to Your Business

Various laws apply to your business when operating online, so on top of the topics listed above, you need to determine how these regulations apply to you:

  • consumer law;
  • privacy law;
  • email marketing law; and
  • contract law.

Key Takeaways

Starting an online business can be a successful venture if you have an idea that there is demand for. However, before you start, you need to ensure you have an efficient plan and know what regulations apply to your business. If you would like more information or help starting your online business, contact LegalVision’s e-Commerce lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Does privacy law apply to my online business?

Your online business likely deals with personal information, such as customers’ names, phone numbers, or email addresses. Therefore, you need to comply with the Privacy Act and handle customers’ personal information with due care.

How does consumer law apply to my online business?

When you sell goods or services to consumers, you need to do so while upholding various consumer guarantees about the quality of those goods or services. This rule applies to any online business as well as physical.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards