Starting a innovative business – Need legal / accountant help

[DanielM]

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I’m going to make this short and to the point without giving away my business concept.

I’m developing a system which will bridge the barrier for people who feel anxious about purchases online (giving away card details) and de-fragmenting the financial system (a true online payment system).

My issue is the following, I will give a basic example:

Sarah wants to buy a dress from http://www.buyfashion.com

Sarah purchases an online token (which equals the value of the dress) and uses this token to buy the dress from http://www.buyfashion.com (no payment details are provided to this unknown, possibly dodgy website.

http://www.buyfashion.com then redeems these tokens back into dollars through my company once Sarah receives her items. We act as a kind of escrow.

So Sarah is safe and happy with her new dress, and http://www.buyfashion.com is happy with the boost in consumer confidence.

MY ISSUE

Legal – Am I dealing in money as these are basically just tokens?

Accountant – How is tax collected for the item if it is paid by tokens? Would it be acceptable for the retailer to still pay tax after they receive payment?

[PRO]

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You need very specific legal advice on this. You also need very specific taxation advice.

regards

[themobilebillboardco]

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Good luck my friend,

I see the concept… but you’re kind of saying “Don’t trust them… trust us”

And really… why?

Paypal and most Australian Banks have great facilities and security available to buy online

All the best though…

JR

[DanielM]

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Thanks for the replies so far.

I know there is paypal/ banks but this would be a solution without fees (unlike paypal) and it would be very easy to implement into websites.

Eventually I would like to float these tokens. I just don’t want to start something which is illegal.

[James Millar]

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Ok great idea but here are some compliance issues for you.

1. I think you may face some serious banking legislation within Australia in that you are effecting storing funds / money. Possibly a banking license.

2. If people are going to buy tokens form you how are they going to pay? You will have a hard time getting an Australian bank to give you a merchant facility to accept card payments with a prepaid business model (unless you front a deposit bond equivalent to the chargeback risk which equals the value of tokens you have unredeemed at any point in time). Similar to the problems with daily deal business merchant facilities.

3. Australian anti money laundering legislation may apply.

Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900

[Author]

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