[Beginner's Guide] 6 common mistakes when starting an online store

In recent years, many people have considered operating online stores and having a taste of being a boss. But as a newbie, it will inevitably hit a wall everywhere, and unfortunately, fall into the trap. In this article, Boutir will analyze 6 common mistakes that newbies should pay more attention to when opening an online store.

Table of Content

1. Did not apply for business registration
2. Inadvertently concealing taxes
3. Forgot to buy labor insurance for employees
4. Did not write “product introduction”
5. Upload low-quality product photos
6. Lack of patience

1. Did not apply for business registration

Many newbies think that they are not operating a physical store and on a small scale, so business registration is not required.

In fact, according to the guidelines of the Hong Kong Inland Revenue Department, whether it’s a physical or online business, usually in Hong Kong “Any form of business, business, craft, profession, occupation or other activities for profit”, business registration is required.

The "Business Registration Ordinance" also stipulates that business operators must apply for business registration for their business within one month after opening. Offenders can be fined $5,000 and imprisoned for 1 year.

However, if your online store is mainly to provide services, and the average monthly business volume does not exceed $10,000, you can apply to the Hong Kong Inland Revenue Department for exemption from payment of business registration fees and levies.

2. Inadvertently concealing taxes

There are also many newbies who think that they do not need to declare profits tax when operating online stores, but this is not the case.

According to the guidelines of the Hong Kong Inland Revenue Department, "operating an industry, profession or business in Hong Kong and obtaining from that industry, profession or business the assessable profits generated in or derived from Hong Kong (except the profits from the sale of capital assets) shall be taxable".

In other words, all online stores operating in Hong Kong need to file tax returns. The Tax Ordinance states that tax evaders can be fined $10,000 and can be imposed a fine equal to three times the tax underpaid.

3. Forgot to buy labor insurance for employees

Another common mistake made by newbies is not helping employees buy "employees compensation insurance" (commonly known as "labor insurance").

In fact, this is the same as MPF contributions, it is a legal obligation that merchants must fulfil. Otherwise, according to Article 40 of the Employees' Compensation Ordinance, merchants are not allowed to hire employees for any work, regardless of the contract period or working hours, full-time or part-time.

When purchasing labor insurance, merchants should pay attention to the minimum insured amount: 

The number of employees for which the insurance policy is validThe minimum insured amount calculated for each accidentNot more than 200$100,000,000Over 200$200,000,000

If the merchant does not purchase labor insurance according to the law:

• It is illegal and can be fined up to $100,000 and imprisoned for 2 years upon conviction;
• Merchants are required to pay a surcharge to the Employees Compensation Assistance Fund Board in accordance with Section 36A of the Employees' Compensation Assistance Ordinance; and
• If an employee suffers from an accident during the course of his employment and suffers from injury or death or a statutory occupational disease, the merchant shall still be liable under the Employees’ Compensation Ordinance and common law

4. Did not write “product introduction”

In addition to fulfilling legal responsibilities, many newbies make common mistakes when creating products, such as failing to make good use of the most basic “product introduction” when uploading the products.

Advertising is certainly a common marketing activity, but in fact, writing a good "product introduction" is also a kind of marketing.

In addition to filling in the basic information and functions of the product, we should also start from the customer's point of view, show what value the product can bring to customers, and point out the advantages over other brands.

In addition, merchants should also consider SEO and add search keywords to the "product introduction" to help customers find the online store and products.

5. Upload low-quality product photos

Also related to the product, but often overlooked by novice merchants, is the importance of product photos. In the case of not being able to see and touch with their own eyes, customers can only understand the product through text and photos.

Although the text can clearly point out the characteristics of the product, the photos are often more attractive to customers, and describe the real object more specifically, leaving the subject with a deeper impression. Whether the impression is good or bad depends on the quality of the product photos.

To take high-quality product photos, no advanced shooting equipment is required. Even if you use a smartphone, use a simple background, use the right light, and ensure that the resolution is high enough to take simple and clear photos, plus simple post-production, it is enough to leave a good impression.

6. Lack of patience

The last common mistake is a lack of patience. Many newbies see that the initial turnover of the business is not as good as possible, or the short-term effect of the advertisement is not as expected, so they give up hastily.

It’s certainly not difficult to open an online store, but if you want to increase sales, you can’t do it overnight: you have to attract the first batch of customers, and then while retaining these customers, you can look for new ones through different marketing activities. Batch, repeat again and again.

Similarly, advertising will not increase sales in a short period of time: you have to regularly evaluate according to advertising data, and then make appropriate adjustments, such as the audience range and publication date of the advertisement, and you will gradually see results after repeated attempts.

When operating an online store, capital investment is certainly important. But the most important thing is your willingness to try and spend time, your mentality and your perseverance.

We understand that everyone comes across difficulties when operating an online store. And you need professional assistance from us. Therefore we have prepared for you the following:

1. Online Store Set Up Workshop

We empower you to open an exclusive online store, and to be outstanding even under the fierce competition in the retail market. Build your own online store, and join our 2-hour hands-on workshop now: boutir.com/seminar

2. 1-on-1 Online Store Set Up Consultation

Not only does our Professional E-commerce Team deal with a variety of problems regarding online store set-up, but we also provide consultations. We’d first get to know your business strategies in great depth, then give advice correspondingly. Join now: https://www.boutir.com/consultation

Boutir Official Website: www.boutir.com

Contact Boutir Customer Success Team: m.me/boutir.hk