Opening an eBay store and what to sort out before you start

Your store name is picked, the first batch of stock is on its way, and you are ready to start listing. Before you do, it is worth treating the store as what it is: a business. Selling through a marketplace carries the usual business decisions, plus a set of obligations specific to online selling, from trade marks and consumer guarantees to eBay's own rules and the tax line between a hobby and a business. Working through these before your first auction closes is far cheaper than fixing them afterwards.

Check your store name is free to use

The name you sell under does two legal jobs. It identifies you to customers, and it can collide with someone else's registered trade mark. Before you commit to a name, search what is already on the registers. IP Australia's TM Checker gives feedback on how likely your trade mark is to be accepted, and the Australian Trade Mark Search lets you check registered and pending marks yourself. Searching first saves you the cost of an application that is refused and, more importantly, the risk of infringing a mark someone else already owns.

There is a second, separate step. If you trade under a name other than your own, you must register it as a business name through ASIC's Business Registration Service. Business names are registered nationally, and registration is what lets you legally trade under that name. But a business name is not a trade mark: it stops someone else registering the same business name, and it does not give you exclusive rights to the name as a brand. If you plan to build the store into something recognisable, a trade mark application covering the classes of goods you actually sell is the way to protect it across Australia.

Pick a business structure that matches your plans

Setting up an eBay store is no different from setting up any other business when it comes to structure, and the options are the same. As a sole trader you are the business: setup is simple and cheap, but you are personally liable for debts and claims against the store. In a partnership you share control and profit with your partners, and each partner is generally liable for the partnership's obligations. A company is a separate legal entity: it can limit your personal exposure to business debts, but it brings more compliance cost, such as ASIC fees, an annual review and a separate tax return.

The right answer depends on what you sell and where you want the business to go. Selling physical products carries real risk of consumer claims, so the asset protection a company offers can matter. A structure that suits a hobby-scale store can become the wrong one quickly if sales take off. Because the trade-offs involve tax as well as liability, this is a decision worth making with a lawyer or accountant who can model the structures against your actual numbers, rather than picking one because it sounds simple.

Know what you owe buyers under Australian Consumer Law

The obligations new store owners most often miss are not eBay's. The Australian Consumer Law, which is Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the ACL), applies to anyone selling in trade or commerce, and that includes a business selling through a marketplace. Under the consumer guarantees, the goods you sell must be of acceptable quality, match their description, be fit for the purpose they are sold for, and come with clear title. The ACCC's guidance for online sellers is explicit that on a marketplace like eBay the consumer buys from you, the seller, not from eBay, so the guarantees are your responsibility, not the platform's.

Two misconceptions need correcting here. First, the auction-style format does not get you out of the guarantees. The ACL carve-outs for sales by auction protect traditional auctions run by an agent for the seller; a business selling through a marketplace auction platform is treated differently, and the guarantees apply to auction-style listings and Buy It Now sales alike. Second, you cannot contract out of them. Under s 64 of the ACL, any term of a contract that purports to exclude, restrict or modify the consumer guarantees is void, so a "no refunds" line in your listings or terms has no legal effect.

The ACL also regulates how you describe what you sell. Misleading or deceptive conduct is prohibited, and so are false or misleading representations about goods. A photo that hides damage, a condition grade that is generous, or a description that overstates the features can each breach the ACL and give a buyer remedies against you. Accurate listings are not just good practice; they are the law.

Work within eBay's rules, and remember that bids are contracts

Alongside the law, your store is governed by the contract you make with eBay when you open the account. The eBay User Agreement and its policies set out what you can sell, how listings must be presented and what happens when things go wrong, and eBay can remove listings, restrict your activity or suspend your account for breaches. They change from time to time, so the seller policies are worth reading as part of the setup, not once a problem arises.

The bidding process is also a legal one. eBay's own policy is that a bid is a binding contract between buyer and seller that stays active until the auction ends or the bidder is outbid, and buyers may only retract a bid in limited cases, such as accidentally entering the wrong amount. On your side, the same logic cuts the other way: once bids have been placed, an auction-style listing can generally only be ended early in limited situations. The practical point is that an eBay sale is a real transaction with rights on both sides, and treating it as informal is where disputes start.

Put your supply arrangements in writing

If the goods you sell come from another business, whether you are distributing their products or having goods manufactured for you, the arrangement should be in writing. A distribution or manufacturing agreement does more than record a price; it sets out who supplies what, to what standard, and what happens when something goes wrong.

The terms that matter most for a marketplace seller are quality and compliance standards, the price and payment terms, who owns the intellectual property in the goods and any branding, whether you have exclusive rights to sell them, and how either side can end the arrangement. There is also a liability question worth being deliberate about. The consumer guarantees sit with you as the seller of the goods to the end buyer, so a well-drafted supply agreement that passes quality obligations and defective stock back up the chain to your supplier or manufacturer gives you a way to recover when a buyer makes a claim against you.

Sort out your ABN, GST and the hobby-business line

Whether your selling is a hobby or a business decides your tax treatment, and the ATO's guidance sets out the indicators: an intention to make a profit and a prospect of doing so, activities that are repeated and continuous, and conduct that is business-like, such as keeping records, advertising to the public and holding a business name or ABN. If you are in business, your sales income is assessable and your expenses are deductible, and you should apply for an ABN. An ABN is free and is also the gateway to other registrations.

GST is where the threshold bites. You must register for GST once your GST turnover reaches or is projected to reach $75,000, and you need to register within 21 days of that happening. Once registered, you charge 10% GST on your sales and lodge business activity statements. The ATO is clear that if you fail to register when required, you may have to pay GST on sales made since you should have registered, plus penalties and interest.

One more reason the hobby-business line is not theoretical: the ATO collects seller data directly from eBay and Amazon under its online selling data-matching program. Sellers with annual sales of $12,000 or more are reported, and the ATO uses that data to identify people transitioning from hobby to business and to check registration and lodgment obligations. Your sales figures are not something you disclose voluntarily; the ATO already has them.

How an Artificer Legal lawyer can help

The decisions in this article are judgement calls, and a lawyer can help you make each of them against your specific plans. That includes choosing a business structure and working through the liability and tax trade-offs, applying for and strategically framing a trade mark, drafting or reviewing your distribution or manufacturing agreement, and reviewing your listing practices for Australian Consumer Law risk, including how you describe and photograph goods.

An Artificer Legal lawyer can also pull the pieces together: advising on which consumer guarantees and eBay policies actually apply to your store, and preparing the agreements you need so that the business is set up properly from the first sale. A short consultation to map your obligations is the practical next step before you go live.

Your auction listings do not exempt you from consumer law

The assumption that costs eBay sellers most is that marketplace selling is informal, so the usual consumer protections do not reach it. They do. Once your selling is a business, the consumer guarantees apply to every sale, auction-style or Buy It Now, and you cannot exclude them in your listings. The ATO already receives your sales data from eBay, so the hobby-business line will be drawn whether you draw it or not. Sorting out your name, structure, consumer law obligations and tax position before your first listing goes live is the cheapest way to make sure the store is built on a sound legal footing.

To summarise: check that your store name is free to use and register it as a business name, choose a business structure that matches your plans, understand that the Australian Consumer Law and the consumer guarantees apply to your sales, work within eBay's rules and treat bids as the binding contracts they are, put your supply arrangements in writing, and sort out your ABN, GST and the hobby-business line before you start selling.