Risks of Doing Business on the Internet

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An Internet business sounds like an easy way to make a living from just about anywhere you can set up a computer with a high-speed Internet connection. However, there are many things to take into consideration that can affect your Internet business, and it is important to plan your business in detail before you begin selling your product or service.

International Business Law

The Internet reaches people all over the world. If you sell products for your business over the Internet, there is a chance you will come across various international laws you may not understand. Some countries prohibit the sale of certain kinds of materials that may be considered racist or offensive, and they have strict laws prohibiting the marketing and sale of these products even on the Internet. You may want to discourage international sales or hire a lawyer who is knowledgeable in international commerce laws.

Domestic Business Law

Not knowing the laws governing Internet commerce could wind up costing you money you had not intended to pay. There are many questions you need to ask regarding sales taxes and business licensing that are best answered by a qualified attorney. If your business is based in one state, for example, but the server you work from is located in another state, is that considered to be two separate business locations with different sales tax implications? In some states that is the case, but in other states it's not a factor. However, these are important questions to answer before starting your Internet business to reduce the risk of running it.

Dishonest Suppliers

The Internet is home to thousands of honest business people who are trying to make a living. However, there are also a sizable number of Internet businesses that have either earned a shaky reputation or are frauds outright. It is not unusual for an Internet retailer to start a relationship with a new supplier that requires a large initial order only to never receive the product. Do a thorough search on each supplier before you start doing business with them, and avoid suppliers that have a reputation for being dishonest or are a new business requiring a large initial order from you.

Avoid COD

If you conduct business on the Internet now, you may notice that few, if any, Internet companies accept cash on delivery, or COD, as a payment method. Be wary of customers that try to use payment methods other than the methods you have posted on your Website, and avoid shipping any product COD. Online business owners risk being defrauded out of money every day when they accept personal checks or money orders. Personal checks can bounce, and money orders can be forged. Never ship product until the payment clears your bank, and give incentives such as an earlier shipping date to customers who use credit cards or other online money transfer payment options.

Internet Connection

When your Internet connection is lost at home you cannot send any emails. When the connection is lost at the location of your Internet company, you cannot do business. If possible, you may want to arrange to have a back-up Internet provider in case your primary provider goes down because of equipment failure or some other unforeseen problem.

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