Everything you need to know before launching your business on social networks

With TikTok or Instagram, “small businesses” flourished in 2020. But it is important to respect the law in order for the activity to be legal, otherwise the risk of the seller is great.

The year 2020 has spawned entrepreneurial vocations. Some decided to take the plunge and launch their “small business” on social networks to sell homemade creations, from resin soap dishes to customized sneakers.

Not always legal small businesses are particularly present on TikTok and Instagram. But social networks are not a lawless zone and the laws governing online commerce activity must be respected.

Do you need to announce your activity?

Even if the seller does not see it appropriate to declare his or her activity because he or she thinks he or she is unprofessional, he or she may still be considered as such in law.

Selling your clothes occasionally to empty your dressing room cannot be considered a professional activity, but selling them every day, yes. Therefore, repetition is an important criterion.

Similarly, buying clothes for the sole purpose of reselling them and earning will constitute a professional activity. Ditto for getting wax and wicks to create candles.

If the seller does not declare his activity but under the law he is considered a professional, he is guilty of illegally selling the products and there will be great risk.

“These are violations of the Commercial Code, the Consumer Code and it carries criminal penalties. Illegal sale of products can lead you to pay fines, pay the State in case there is unpaid VAT and you can ban to create companies for several years “, said Alexandre Lazarègue, a lawyer who specializes in digital and internet law.

Initially, creating a self-employed business was a good solution. But this status cannot be maintained beyond a certain turnover (ceilings vary according to activity). Will need to create sole proprietorship (EI, EIRL) or company (SARL, SAS, EURL).

How to get paid for products

On Instagram, TikTok or even on Snapchat, some apprentice traders invite their customers to exchange private messages to find out the payment terms, sometimes requesting direct payment through the application for exchanging money between of friends Lydia.

Except in the case of professional activity, this process is not legal. To be in good standing, you must “open a professional account for your company and use an official payment method”, explains Me Alexandre Lazarègue.

“When you create a company, you have to declare the payments. So the transfer or the check from a private person to a company is legal”, Me Alexandre Lazarègue pointed out. “Payment methods must be official and invoices must be issued” to customers.

In France, it is almost impossible to create your business on Instagram or TikTok simply because these platforms do not offer an integrated payment system. In the United States, Facebook is testing a shopping function on its service and on Instagram that allows customers to choose and pay for a product without leaving the application.

This function is not available in France. For the sale to be legal, the customer must be required to register the RIB of his or her professional bank account so that he or she can make the transfer. A tedious solution that is far from satisfactory for the customer.

The easiest way is to go through a third-party tool and just use social networks as virtual showcases. By creating your own e-commerce site or by deciding to make your product available in marketplaces like Amazon or Etsy, which specialize in selling handicrafts.

What is forbidden to sell

Social media sellers must follow the law just like any other merchant. That is why counterfeiting is prohibited and homemade cosmetics should be forgotten.

“Cosmetics are under health law because they are products that are likely to be dangerous. You have to respect a whole host of health policies that are impossible to respect when it comes to homemade products. At that point, you put the buyer at risk, and he won’t have many ways to turn away from the seller, ”Me Alexandre Lazarègue said.

Even on the internet, the seller must respect the rights of the buyer and allow him to assert the right to withdraw, request a refund … With a few exceptions. In the very particular case of personalized products-for example sneakers customized at the customer’s request, the seller may deny him his right to withdraw.

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