Online Business Laws You Need to Know (2023)

  • Small business owners cannot afford to break online business laws designed to protect consumers - penalties run into thousands of dollars.
  • Sales tax collection is a big problem for online retailers; The rules vary by state, so it's difficult to administer them without the help of software.
  • Business owners should be careful when marketing to new and existing customers.
  • This article is for business owners with an ecommerce store or online component in their business.

Ecommerce platforms and online marketplaces make it easy to sell online, but ecommerce involves more than just uploading product photos and accepting payments. There are laws and regulations that you must follow, and if you run afoul of any of them, you and your online business could face serious legal and financial consequences. We explain what you need to know and why.

What are the online business laws?

Ecommerce, the buying and selling of products over the internet, has exploded in recent years as people around the world have become more comfortable and comfortable with this way of buying. This opportunity has not been missed by entrepreneurs who are increasingly selling their products online using e-commerce platforms and marketplaces.

Online shopping is regulated to protect customers, with safeguards in place to protect consumers from misleading marketing practices and privacy breaches. These legal rules are known as online business laws. Although the laws about how your businessgo onlinevary from state to state, there are also national laws and international regulations. Laws cover everything from taxes to privacy. Also, e-commerce laws are constantly changing due to constant technological advances.

Online Business Laws You Need to Know (1)key to take:Online business laws regulate how a business owner can legally conduct business on the internet. These laws cover marketing, taxes, and security, and are constantly changing as e-commerce technology advances.

6 Types of Online Business Laws You Should Know

There are many online business laws that every ecommerce entrepreneur should know, but here are the top six.

(Video) business laws basics guide for small business owners

1. Sales Tax Collection

Death and taxes are the two certainties of life. The latter becomes extremely complicated for online retailersvalue added tax.

"The first thing to think about is sales tax," says Lisa Lewis, chartered accountant and editor of the TurboTax blog. “In the past, you collected sales tax where your business had a physical presence. Now states are eligible for sales tax whether or not you have a physical presence in the state.” States also set the rules of what to tax and when.[Read ourTurboTax reviewto find out how tax software can help your business.]

To avoid costly mistakes, business owners should review sales taxes state by state, Lewis said. One state may not expect sales tax unless the retailer exceeds a certain sales amount, while another expects it even on a single small sale.

“It is extremely complex. Our hope is that the government will simplify it and get all 50 states to switch to a flat tax,” said Mike Nunez, founder of Tilde Enterprises. “You can have state, county, even county taxes. There are three tiers of tax that you need to calculate.”

The good news, however, is that highly rated tax software thatbest POS systemsand leading e-commerce platforms take the guesswork out of calculating sales tax. It is crucial for online traders to take advantage of these programs as ignorance is no defense. When the Supreme Court ruled on a relevant case in 2018, Associate Justice (Ret.) Anthony Kennedy noted that there is software to help small businesses overcome sales tax levying hurdles.

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2. Data protection and data security

Protect customers' personal information and takeCyber ​​security for your businessseriously are of paramount importance. One data breach or hack is all it takes to destroy a small business. CorrespondingVerizonIn the Data Breach Investigations Report, there were 715 small business data breaches in 2021.

E-commerce businesses request and store a lot of important customer information, including credit card numbers, personal contact information, bank account numbers, and social security numbers, and they need to protect the privacy and security of that information. Although the US does not have a federal data protection regime like EuropeGeneral Data Protection Regulation (GDPR), some states including California, Maine and Nevada have passed their own laws.

In 2020, California has oneData Protection ActTo do this, companies must disclose the information they have collected. Consumers have the option to limit the sharing of their information or to opt out. California law applies to businesses that collect data from at least 100,000 consumers. It also applies to companies that make more than $25 million annually, or make more than 50% of their revenue from the sale of consumers' personal information. The law will come into force on January 1, 2023.

Virginia also passed a privacy law that applies to companies that process more than 100,000 pieces of consumer data. Businesses that generate at least half of their revenue from selling consumer data are also affected. The law will empower customers to correct and delete data or object to data collection altogether. This law will also come into force on January 1, 2023. Utah and Colorado recently passed legislation with the same or similar criteria.

It is important that you follow data security best practices. One way to do this is to follow the recommendations of the Federal Trade Commission."Privacy by design"Recommendations that include the following.

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  • Privacy and security must be built into products and services from the start.
  • Businesses should only collect the data they need for business purposes and dispose of it after the transaction is complete.
  • E-commerce websites must have adequate safeguards in place to protect consumer data.
  • Data management personnel, procedures and controls must be implemented to protect customer privacy.

Online Business Laws You Need to Know (2)Did you know?:Cyber ​​security is one of themmost common ecommerce challengesfor small businesses.


The above GDPR is a law that applies to all companies that collect data from consumers in the European Union. GDPR requires companies to get clear permission from these consumers before using their data. Organizations must also be transparent about data collection and adhere to certain security standards for storing data. As you surf the web, you will find that many websites have pop-ups related to GDPR compliance. Your website may also need them if you do business in the EU.

4. Marketing Breach

The Internet offers numerous opportunities for companies to market their products online, but certain rules must be followed. Online retailers, no matter how small, are subject to state regulations when selling their products over the Internet. For example, businesses must not make false claims about products and services and must disclose paid recommendations.

E-Mail-MarketingIt's a popular way to reach potential and existing customers. Business owners (and their employees) need to ensure their email campaigns comply with the CAN-SPAM law. The law, passed by the Federal Trade Commission in 2009, states that business owners can be fined up to $46,517 for each individual email violation. Under the CAN-SPAM Act, online merchants can be fined for:

  • The email contains a misleading subject line.
  • The email contains incorrect or misleading headers.
  • The email does not indicate that the message is an advertisement.
  • The company does not share your location with email recipients.
  • The email does not instruct recipients on how to unsubscribe from future emails.
  • The company does not accept deletion requests within 10 business days.
  • The company stops monitoring the actions of a contracted email marketing service. (According to the FTC, "Both the company whose product is advertised in the message and the company that actually sends the message may be held legally liable.")

In addition, e-commerce merchants must not infringe any trademarks or patents. "It's very easy for a small business owner to look up product images, download them and use them on [their] website, but if that's copyrighted or trademarked now, you're breaking the law," Nunez said. “You may not use celebrity images [and] you may not use any other person's trademarks or copyrights. You have to be very careful to avoid that.”

(Video) Essential Business Laws for Business

Also, Nunez added, if your company sells products aimed at children, be careful not to violate the Children's Online Privacy Protection Act.

“You can't advertise to kids [and] you can't try to convince them to buy something. You have to be careful with the kids," Nunez said.[Looking for tips to help you legally market your business online? look at oursSmall Business Marketing Guide.]

5. PCI Compliance

Introduced in the early 2000s by credit card issuers Visa, MasterCard, Discover, and American Express, the Payment Card Industry Data Security Standard (PCI DSS) was designed to protect consumer payment data. An online retailer that accepts credit card payments must complyPCI compliancein the storage, processing and transmission of credit card data. Penalties for non-compliance include exorbitant fines and your merchant account agreement can be terminated. Luckily she isbest credit card processorsoften have PCI measures built into their services.

6. Terms and Conditions

An online store needs legally enforceable ground rules for its e-commerce site – this is where terms and conditions come in. They explain their policies on aspects of their business such as: B. Returns and shipping, and may reduce your legal liability if you encounter a disagreement with a customer. The terms and conditions should include pricing and payment terms, as well as your company's shipping, exchange, return, and cancellation policies. They should also explain the process for resolving a dispute. Also list your jurisdiction and limitations of liability in the Terms and Conditions.

Online Business Laws You Need to Know (3)Tipp:All businesses, not just ecommerce businesses, should make sure they don't break these rules.amazing economic laws.

(Video) Ep 48 Fifteen Business Laws You Should Know Part 3

Dealing with the legal side of your business

Selling through your ecommerce store can help you reach a wider audience and generate more sales. However, if you venture into the digital world, you must follow important laws and regulations to avoid expensive fines. Taking the time to familiarize yourself with these regulations can help you run a safe and successful online business.

Shanya Waltower contributed to the writing and reporting of this article. Source interviews were conducted for a previous version of this article.


What are the top 5 online businesses? ›

5 Most Profitable Online Businesses
  1. Training. People are quickly realizing that the things they learn in their universities have nothing to do with their life. ...
  2. Selling Digital Products. This is the next profitable business online. ...
  3. Blogging. I am a professional blogger. ...
  4. Freelance writing and other freelancing. ...
  5. Amazon FBA.

What is the key points of online business? ›

Let us have a look at them:
  • Email Marketing – It is one of the most effective marketing strategies so far. ...
  • Video Marketing – Around 85% of consumers prefer to watch videos from their favourite brands. ...
  • Social Media Marketing – Social media is one of the most viable marketing options for online business owners.
26 Feb 2021

How to start small business online? ›

  1. Assess the viability of your new business idea.
  2. Develop a business plan.
  3. Choose a business name.
  4. Decide on your business structure.
  5. Take care of all the legal tasks.
  6. Build your website and choose your sourcing and fulfillment methods.
  7. Develop and implement your prelaunch marketing strategies.
  8. Launch your new business.
6 Nov 2022

How do I start selling online? ›

How to successfully sell online in 9 steps
  1. Find a niche or competitive angle.
  2. Establish your target audience.
  3. Decide which products to sell.
  4. Create an online store.
  5. Choose your sales channels.
  6. Set up payment processing.
  7. Choose your shipping methods.
  8. Promote your products.
7 Sept 2022

What are the 7 steps to starting an online business? ›

7 Steps to Start Your Online Business
  1. Find Your Motivation. Before venturing into any business, take a moment or two and question your true motivation. ...
  2. Develop An Idea. ...
  3. Do Your Research. ...
  4. Craft A Business Plan. ...
  5. Determine A Corporate Identity. ...
  6. Build A Reliable Team. ...
  7. Just Keep Working.
22 Jun 2018

What are the rules for selling online? ›

6 Online Selling Rules and Regulations
  • When selling online, you need a Terms of Service. ...
  • Protect all your data. ...
  • Protect your products online. ...
  • Meet your best friends: Trademark, patent, and copyright. ...
  • Keep good records of online transactions from the outset. ...
  • Have a compliant Privacy Policy.

What are the 7 steps to opening an online store? ›

How to start an online store
  1. Choose an ecommerce platform.
  2. Decide on a target audience.
  3. Choose your products.
  4. Design your site.
  5. Connect a payment gateway.
  6. Choose a business structure.
  7. Get your store ready for launch.
  8. Launch your store.
15 Mar 2022

What are the five 5 biggest challenges for online business? ›

In this content, we are going to discuss the Top 5 Challenges that online retailers' face and our own suggestions.
The Common Challenges in Online Business (And how to Tackle Them)
  • Getting Attention. ...
  • Build Trust. ...
  • Identifying the Mistakes. ...
  • Converting Visitors to Customers. ...
  • Retaining Customers.
3 May 2016

What are the 7 C's of online marketing? ›

In contrast to other marketing models, the 7 Cs Compass Model considers both the marketing strategies as well as the segment to which the strategies are being targeted. The seven Cs are Corporation, Commodity, Cost, Communication, Channel, Consumer and Circumstances.

How do I make my online business successful? ›

8 Tips For Running A Successful Online Business
  1. Organize Your Web Assets. ...
  2. Maintain Customer Records Safely. ...
  3. Do you know your competition? ...
  4. Protect Your Brand's Online Reputation. ...
  5. Invest on a good internet connection. ...
  6. Stay On Top of the Latest Trends. ...
  7. Be Persistent. ...
  8. Know When to Call It Quits.
10 Aug 2016

What online business can I start with no money? ›

Online business ideas that cost no money
  • Start a blog. ...
  • Do affiliate marketing. ...
  • Become a community manager. ...
  • Offer SEO services. ...
  • Do translations. ...
  • Provide content services. ...
  • Sell things online. ...
  • Web design.
11 May 2022

Which business makes the most money? ›

Most Profitable Business Ideas
  1. Business Consulting. If you're an expert in your industry and have been working at it for years, you should consider consulting. ...
  2. IT Support, Technology Consulting, and Repair. ...
  3. Cleaning Services. ...
  4. Accounting and Tax Preparation. ...
  5. Auto Repair. ...
  6. Real Estate.

Do you need permission to start an online business? ›

If you're wondering whether your online business needs a business license or other permits in order to operate legally, the answer is yes. Obtaining the proper ecommerce business licenses and permits is a crucial step in starting your online business.

Which app is best for online business? ›

Best project management apps
  • Trello.
  • Asana.
  • Slack.
  • Zoom.
  • Skype.
  • Microsoft Teams.
  • Google Meet.
29 Jun 2022

What kind of online business is most profitable? ›

Top 12 Most Profitable Online Businesses: From Online Surveys To Affiliate Advertising
  1. Affiliate Marketing. ...
  2. Sell Your Own Products. ...
  3. Build a Membership Site. ...
  4. Sell Your Services. ...
  5. Buy and Sell Websites. ...
  6. Dropshipping. ...
  7. Become a Reseller. ...
  8. Online Surveys.

Do you need permit for online selling? ›

According to the Revenue Memorandum Circular No. 60-2020, anyone doing business or earning income in any manner or form, including those that make money online, or sell products or services, is required to be registered with BIR.

How much money do I need to open an online store? ›

To build an online store, you need anywhere from $1000 – $100,000. There is no set price for building an online store because the cost varies for different companies, depending upon what each company needs. A small company can spend $1000 – $10,000, while an enterprise company can spend $50,000 – $100,000.

What is the simplest way to sell online? ›

How to sell online – the simplest way to do it
  • Building an online store.
  • Selling via online marketplaces.
  • Selling on social media.
  • Selling via joint ventures.
  • Selling via email.
  • Selling through Google Ads or Facebook Ads.
  • Dropshipping.
  • Selling via Amazon.
3 Jul 2022

What are the 4 basics to a start up business? ›

Requirements for Starting a Business

An ownership or business structure. A business registration certificate. A legal license or seller's permit (as well as other legal documents) A source of funding.

How do I start an online business with no experience? ›

Here's a quick index to help you navigate this guide:
  1. Step 1: Decide on your niche.
  2. Step 2: Choose between dropshipping or holding your own products.
  3. Step 3: Brainstorm a business name and register your domain name.
  4. Step 4: Select products to sell.
  5. Step 5: Create your website with an online store builder.
28 Feb 2018

What is a good business to start in 2022? ›

Best small business ideas to start in 2022
  • Start a dropshipping business.
  • Design and sell print-on-demand t-shirts.
  • Launch your own book.
  • Create digital products or online courses.
  • Sell print-on-demand posters, greeting cards, and prints.
  • Start a charitable business.
  • Sell a service.
  • Create an online fashion boutique.
3 Jun 2022

What are the 3 types of online selling? ›

The Most Common Types of Ecommerce Business Models
  • B2C (Business-to-consumer). B2C businesses sell directly to their end-users. ...
  • B2B (Business-to-business). ...
  • B2B2C (Business-to-business-to-consumer). ...
  • B2G (Business-to-government). ...
  • C2B (Consumer-to-business). ...
  • D2C (Direct-to-consumer). ...
  • C2C (Consumer-to-consumer).

How do I protect myself as an online seller? ›

How to Protect Yourself When Selling Online
  1. Protect your personal information. ...
  2. Limit communication channels. ...
  3. When selling locally, stick to in-person transactions. ...
  4. Only accept payment through approved methods. ...
  5. Take extra caution with shipping. ...
  6. Take advantage of seller protections and guidelines.

What are the golden rules of selling? ›

6 Golden Rules For Success in Sales
  • 1 - Call As High As You Can. ...
  • 2- Integrity Is Your Only Asset. ...
  • 3 - Sell Aspiration. ...
  • 4 - Recruit a Coach. ...
  • 5 - Always Be Prepared to Walk Away. ...
  • 6 - Talk About Money Early, and Price Late.
15 Aug 2011

What is the easiest online store to set up? ›

Top 10 Easiest Ecommerce Platforms Of 2022
  • Shopify. ...
  • PrestaShop. ...
  • BigCommerce. ...
  • Wix. ...
  • Volusion. ...
  • ERP Gold. Best inventory management SaaS platform for wholesale manufacturing organizations. ...
  • GoDaddy. Best easy-to-use ecommerce platform for small businesses. ...
  • WooCommerce. Best ecommerce platform for customizations.
4 Jan 2022

What is the best online sales platform? ›

The Best E-Commerce Platforms of 2022
  • Squarespace: Best Overall E-Commerce Platform.
  • Square Online: Best for Omnichannel Selling.
  • Ecwid: Best for Existing Sites.
  • Shift4Shop: Best Free E-Commerce Platform.
  • Shopify: Best for Dropshipping.
  • Wix: Best Drag-and-Drop Editor.
  • Weebly: Best Value.
  • BigCommerce: Best for Boosting Sales.
18 Nov 2022

How can I start my own business from home? ›

How to Start a Small Business at Home
  1. Come up with your business idea. ...
  2. Decide what you're going to sell. ...
  3. Write a business plan. ...
  4. Decide on your business's legal structure. ...
  5. Apply for your EIN. ...
  6. Set up a business bank account. ...
  7. Look into insurance. ...
  8. Set up a home office.
26 Apr 2021

What are the top 5 business trends today? ›

Whether you're a scrappy startup or part of a Fortune 500 company, here are the top business trends to know:
  • E-commerce Growth Persists Post-Pandemic. ...
  • 5G Vastly Improves Data Collection and AI Capabilities. ...
  • Employees Actively Seek Out Remote and Hybrid Work. ...
  • Businesses Expand Ads, Communities, and Commerce on Social Media.
22 Nov 2022

What are the two major issues for online entrepreneur? ›

Here are the top 10 most common challenges faced by eCommerce businesses of all sizes.
  • Finding the right products to sell. ...
  • Attracting the perfect customer. ...
  • Generating targeted traffic. ...
  • Capturing quality leads. ...
  • Nurturing the ideal prospects. ...
  • Converting shoppers into paying customers. ...
  • Retaining customers.

What is the #1 problem you face with online marketing? ›

1. Resource shortage. Unlike huge companies, SMBs often lack the funds to attract marketing professionals. They also have a tight ad budget and lack knowledge of the field's ins and outs.

What are the 4 P's of online marketing? ›

The four Ps are product, price, place, and promotion. They are an example of a “marketing mix,” or the combined tools and methodologies used by marketers to achieve their marketing objectives.

What are the 7 P's of marketing? ›

The 7Ps of marketing are – product, pricing, place, promotion, physical evidence, people, and processes. The 7 Ps make up the necessary marketing mix that a business must have to advertise a product or service.

What are the 5 pillars of a digital marketing campaign? ›

  • Content Marketing. It's no coincidence this is first on the list of digital marketing pillars. ...
  • Inbound Marketing. ...
  • Social Media Marketing. ...
  • Email Marketing. ...
  • Mobile Marketing. ...
  • Bonus: Integrated Marketing.
11 Nov 2011

Why do most online businesses fail? ›

Heavy competition

Sometimes, the answer to the question of “why do online businesses fail?” is very simple: too much competition. Because there are so many businesses online selling the same items as you, or with a similar business model, it can be very difficult to differentiate yourself.

How can I grow my business with no money? ›

The easiest way to start a business with no money is to sell your services. Even if you haven't mastered a specific area, being better than the average person at something means you can start a business that helps them.
Sell your services
  1. Freelance writing.
  2. Virtual assistant.
  3. Social media marketing.
  4. Handyman services.
21 Mar 2022

What are the five steps to starting an online business? ›

Here's how you can start your own online business
  1. Step 1: Define critical business components.
  2. Step 2: Adopt your software and platforms.
  3. Step 3: Build your online store.
  4. Step 4: Launch sales and marketing strategies.
  5. Step 5: Optimize and refine constantly.
18 May 2022

Which business is best for beginners? ›

Best Small Business Ideas
  1. Handyman. Image Source. ...
  2. Woodworker. ...
  3. Online Dating Consultant. ...
  4. Sewing and Alteration Specialist. ...
  5. Freelance Developer. ...
  6. Personal Trainer. ...
  7. Freelance Graphic Designer. ...
  8. Life/ Career Coach.
21 Oct 2022

What is the easiest business to own? ›

What are the easiest home businesses to start?
  • Dog Walking.
  • Selling on eBay.
  • House Cleaning.
  • Freelance Writing.
  • Home Tutoring.
  • Social Media Service.
  • House Painting.
  • Yoga Classes.

What is the easiest business to start? ›

Answer and Explanation: The easiest form of business organization to start and stop is the sole proprietorship. A sole proprietorship describes personal entrepreneurship or business that is owned and managed by a single individual.

What is the quickest business to make money from? ›

Latest 6 Business Ideas to Make Money Fast in December 2022
  • Freelancing for Professionals. Freelancing is one of the options to earn money instantly, as the freelancer receives the money just after the project completion. ...
  • Food & Beverage Business. ...
  • Blogging. ...
  • Boutique. ...
  • Digital Marketing. ...
  • Custom Jewellery.
5 days ago

What industry will make you rich? ›

What business makes the most millionaires? A few businesses have made more millionaires than any other. These businesses include investment banking, hedge fund management, and private equity. All these belong to the financial sector, the top industry that produces the most millionaires.

What are the Top 5 selling items online? ›

Over half of all eCommerce sales in the US happen on the Amazon marketplace, so it's a great place to sell your products online.
Best products to sell on Amazon
  • Books. ...
  • Luggage & travel. ...
  • Toys & games. ...
  • Electronics. ...
  • Photography equipment. ...
  • CD & vinyl. ...
  • Seasonal products.
25 Nov 2022

What is the most popular business online? ›

16 best online business ideas
  • Start your own clothing line.
  • Launch a dropshipping store.
  • Sell your art online.
  • Become a freelance writer, designer, or developer.
  • Teach an online course.
  • Flip your thrift store finds.
  • Publish your own book.
  • Start a blog.
2 Feb 2021

What are the 5 most profitable businesses? ›

Most Profitable Business Ideas
  1. Business Consulting. If you're an expert in your industry and have been working at it for years, you should consider consulting. ...
  2. IT Support, Technology Consulting, and Repair. ...
  3. Cleaning Services. ...
  4. Accounting and Tax Preparation. ...
  5. Auto Repair. ...
  6. Real Estate.

What is the most bought item? ›

The most sold item in the world is clothing and fashion items. This ranges from women and men's outfits to children's clothing, shoes, accessories, and more.

What items sells fast? ›

The 20 Best Things to Sell for Quick Money Right Now
  • Jewelry and watches. ...
  • Video game consoles. ...
  • Old phones and accessories. ...
  • Purses, wallets, and backpacks. ...
  • Yard equipment. ...
  • Jeans, workwear, and designer clothing. ...
  • Furniture. ...
  • Baby gear.

What can I sell online with no money? ›

5 Online Businesses You Can Start With No Money
  • Drop Shipping.
  • Affiliate Marketing.
  • Blogging.
  • Online Video.
  • Information Products.
  • Putting It All Together.
29 Nov 2022

Which business is best to earn money? ›

What is the best business to earn money?
  • Create and sell chatbots to other business owners.
  • Become an online fundraising consultant.
  • Get paid for educational blogging.
  • Use your education to teach classes online.
  • Become a green app developer.
  • Make money through social crowdfunding.
  • Write and publish your own ebooks.

What is the cheapest online business to start? ›

If you want to start a low-cost business, these 25 ideas will help inspire your entrepreneurial passion.
  1. Content creation. ...
  2. Personal or virtual assistant. ...
  3. Event planning services. ...
  4. Errand/concierge service. ...
  5. Professional reviewer. ...
  6. Social media consultant. ...
  7. Etsy shop. ...
  8. Online courses and tutoring.

What business is growing the fastest? ›

Fastest Growing Industries in the US by Revenue Growth (%) in 2022
  • Oil Drilling & Gas Extraction in the US. 87.0%
  • Cruise & Travel Agency Franchises. 76.4%
  • Wedding Planners. 75.5%
  • International Airlines in the US. 64.0%
  • Travel Insurance. 62.1%
  • Tour Operators in the US. 57.1%
  • Hotels & Motels in the US. ...
  • Ethanol Fuel Production.

What are people buying 2022? ›

Luckily, we have done the research for you. This article will list the 35 top trending products for 2022, categorized by niche.
Top Trending Gadget Items
  • Phone Straps. Average selling price: $10. ...
  • Power Banks. Average selling price: $20-$40. ...
  • Phone Holders. ...
  • Mouse Pads. ...
  • Car Chargers.

What is the easiest business in the world? ›

10 Business Ideas to Make Easy Money and Change the World
  • Educational blogging. ...
  • Teaching online. ...
  • Green app developer. ...
  • Uber driving. ...
  • Social crowdfunding. ...
  • Creating a betterment program. ...
  • Writing ebooks. ...
  • Create an educational travel company.
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