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

On TikTok or Instagram, “small businesses” have flourished in 2020. But it is important to respect the law so that the activity is legal, otherwise the seller risks a lot.

The year 2020 has given rise to calls for entrepreneurship. Some have decided to take the plunge and launch their “small business” on social networks to sell homemade creations, from resin soap dishes to custom sneakers.

These not always legal small businesses are particularly present on TikTok and Instagram. But social networks are not a lawless zone, and the laws that regulate the activity of online commerce must be respected.

Do you need to specify your activity?

Even if the seller does not see fit to disclose his business because he does not believe he is a professional, he may still be considered as such under the law.

Selling your clothes occasionally to empty your dressing room would not be considered a professional activity, but selling them daily would be. Repetition is therefore an important criterion.

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

If the seller has not declared his activity, but according to the law he is considered to be a professional, he will be guilty of illegal sale of products and risk a lot.

“It is a breach of the commercial law, the consumer law and it is criminal law. The illegal sale of products can lead to you paying fines, paying the state in unpaid VAT and you can even be banned from setting up companies for several years”, specifies Alexandre Lazarègue , lawyer specializing in digital and internet law.

Initially, it is a good solution to set up an independent company. But this status cannot be maintained beyond a certain turnover (the ceilings vary according to the activity). It will then be necessary to set up a sole proprietorship (EI, EIRL) or a company (SARL, SAS, EURL).

This is how you get paid for products

On Instagram, TikTok or even Snapchat, some apprentice merchants invite their customers to exchange private messages to find out the terms of payment, and sometimes they request direct payment through the application to exchange money between friends Lydia.

Except that in the case of professional activity, this process is not legal at all. To have a good reputation, you must “open a professional account for your company and use official means of payment”, explains Me Alexandre Lazarègue.

“When you create a company, you must be able to specify the payments. So only the transfer or check from a private person to a company is legal”, clarifies Me Alexandre Lazarègue. “Payment methods must be official and invoices must be provided” to customers.

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

This feature is not available in France. For the sale to be legal, the customer must therefore be asked to register the RIB on his professional bank account so that he can make a transfer. A boring solution far from satisfactory for the customer.

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

What is prohibited to sell

Social media sellers must follow the law like any other merchant. Counterfeiting is therefore prohibited, and homemade cosmetics must be forgotten.

“Cosmetics are covered by health legislation because they are products that are likely to be dangerous. You have to respect a whole series of health rules that are impossible to comply with when it comes to home-made products. At that point you put the consumer at risk and he will not have many means to turn against the seller,” says Me Alexandre Lazarègue.

Even on the Internet, the seller must respect the consumer’s rights and allow him to exercise the right of withdrawal, request a refund… With few exceptions. In the very specific case of personalized products – for example, sneakers customized according to the customer’s wishes, the seller can deny him his right of withdrawal.

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