Reselling

[Angus]

I have several questions - any that can be answered would be appreciated…

When opening up a new Internet website business, what things need to be completed in order to stay compliant within the laws of business?

We currently sell products for distributors without any formal agreement. Is there anything wrong with doing this type of reselling/drop-shipping method? Do we need a recognizable agreement between the distributors and us? What are the drawbacks of not having an agreement?

For example, we currently find deals on the Internet by searching other business websites and post those deals on our website at a slightly higher price. If someone orders an item from our website, we simply order it from the website/store that we found it and have it shipped to the customer. Is there anything wrong with doing this type of reselling/drop shipping method? We do not advertise the stores/websites that we found the products, we only advertise the products... otherwise, the customer would simply go to the store and purchase for less. We know that there are a lot of people out there who do not like to spend too much time bargain hunting, so we do all the research and find the best price and raise it enough so that the customer is happy and we make a slight profit. Are we doing anything wrong legally by operating this way?

We have a vendors license along with an Employer Identification and mainly operate business ventures through our website. Do we need any other type of legal documents or licenses?

How do we gain back any sales tax we may have paid outside of Ohio?

Are there any types of programs that help aid new business ventures or grants, etc.?

 

[Michael Wechsler]

(1) You find out the laws pertaining to your business by researching them. In some cases there are already resources for a certain type of business.

(2) In your instance you definitely need an agreement with your distributors and I am guessing that by purchasing you already have one and don't realize it.

(3) What is dangerous about your business is that if your customer doesn't pay you, you're out the money and the customer has the merchandise. Unless you have a mechanism where you can guarantee payment first, this is a dangerous way to operate. Make sure you also have excellent agreements between you and your customers.

(4) There are many programs that provide grants for new businesses but I'm not sure if you qualify unless you have something unique about your business. You should do a search and find out what grants might be available.

Good luck with your business.