All businesses need to comply with both the law and applicable regulations. This includes wholesalers.
Setting up your business
This is not specific to wholesalers but is still an important point. As soon as you make the decision to set up as a wholesaler, you need to choose a business structure. If you choose to be a limited company, you need to go through the administrative process of registering one.
You will then need to register with HMRC for corporation tax. It may be advisable to register for VAT as well. This may not be technically necessary at the start. Registering for VAT can, however, give you more options for your business. It can also save time later.
As a final point, if you are planning to take on employees, then you will need to register as an employer with HMRC. You may need to set up a workplace pension scheme and arrange for employees to be auto-enrolled into it.
Make sure you get any necessary insurance cover
The insurance cover you will need will depend on what specific business activities you are performing. As a rule of thumb, however, most wholesalers are likely to need public liability insurance and insurance for any vehicles used on the public road. If you have employees, you will also need employers’ liability insurance.
It can be highly advisable to get more than the minimum level of insurance coverage. This is, however, entirely at your discretion rather than a legal requirement.
Registering with customs
If you are delivering goods outside the mainland UK, you will need to register for customs. If you are only delivering to Northern Ireland, then you just need an XI-EORI number. If you are delivering to the EU then you need a regular EORI number.
You will also need an XI-EORI/EORI number if you are importing goods from NI/the EU yourself (as opposed to via a supplier).
Please note, you need an EORI number even if you are not VAT registered. It is required for customs declarations on goods’ shipments.
Arranging payment infrastructure
Realistically, modern wholesalers need to be able to accept payment cards. This means arranging a suitable contract with a payment service provider. As a part of this, you will be required to accept (and adhere to) their terms and conditions.
These terms and conditions are typically based on the applicable laws and regulations. This means that you need to be sure that you understand them and take them seriously. Breaking them could not only put you in breach of contract but also open you up to more serious issues, up to and including criminal prosecution.
Part of these terms and conditions will include an obligation to submit to a disputes-resolution process. This is also known as a chargeback process.
It’s highly advisable for wholesalers to learn about this process in detail and to know how to protect themselves from chargebacks. It is, however, also worth noting that it may be possible to dispute the outcome of the chargeback process in a court of law.
Complying with data protection requirements
As a wholesaler, it’s practically guaranteed that you will handle personal data. If nothing else, you will probably have the work contact details of some of your suppliers’ employees. You may also have personal data for your own customers.
If you have employees, you will definitely have personal data for them. This may include particularly sensitive information such as financial and medical details.
This means that data protection should be high on your list of concerns. You will very probably need to register with the Information Commissioner’s Office (ICO). If you are handling the personal data of EU residents, you may also need an EU data representative. Even if, technically, you don’t, it can still be advisable to have one to ensure that you stay in full compliance with the law.
Getting business licences
The Government has a business licence finder on its website. This can be a very convenient way to find out what business licences you will need.
In the mainland UK, business licences are typically administered at the local authority level. This means that your local authority’s website will also generally have the information you need. It can be useful to cross-reference both sources of information to ensure that nothing is missed.
In Northern Ireland, most business licensing is done by local councils, but some are managed by the courts. Again, however, your local authority’s website is likely to be a good source of information on what licences you need and how to get them.
Business licences for wholesalers generally fall into two types. There are licences relating to the products you sell and licences relating to the activities you perform.
Products that are subject to licensing restrictions
As a rule of thumb, if an item is restricted in any way, you probably need a licence to sell it. Obvious examples of this include:
- Controlled medicinal products
- Fireworks and explosives
- Firearms and ammunition
You may have noticed that tobacco and nicotine products are not on that list. Currently, there is no requirement to have a business licence to sell these. They are, however, subject to special controls on storage, handling, and sales.
Activities that are subject to licensing restrictions
As well as thinking about what products you sell, think about what activities you intend to perform. You might be surprised how many of them require a business licence.
For example, using CCTV, operating goods vehicles and disposing of waste are all regulated activities. In fact, the rules around waste disposal can be very detailed so it’s important you understand and comply with them.
Depending on how you run your business, you may be subject to any or all of the following:
- The Sale of Goods Act 1979
- The Unfair Terms in Consumer Contracts Regulations 1999
- The Consumer Protection from Unfair Trading Regulations 2008
- The Consumer Contracts Regulations 2013
- The Consumer Rights Act 2015
In short, all these acts essentially require you to treat your customers reasonably. For example, they need to be clearly aware of what they are (and are not buying). They need to know the price of the item(s) and what conditions, if any, are attached to the sale.
Any documentation presented to the consumer must be written in clear terms and in good faith. In other words, wholesalers must not attempt to mislead their customers.
For more information, read E-commerce, E-commerce between businesses, Doing business with consumers and Contracts for customers. Remember to make the relevant Terms and conditions for your business. Do not hesitate to Ask a lawyer if you have any questions.
- What laws and regulations do wholesalers need to consider? - 10/11/2022
- Legal requirements for wholesalers and retailers - 09/06/2021