Owning an online business is great. You get to be your own boss, set your own hours, and work from any place that has an internet connection. Online business startups also tend to have low costs, so they’re great for innovators who are starting a business without a lot of cash on hand.
This step-by-step guide will explain how starting a business works.
1. Choose your structure.
All business startups need to choose whether they’ll be a corporation, limited liability company, or sole proprietorship.
The simplest business structure is a sole proprietorship, which can be run by an individual or a married couple. Setting one up doesn’t require any paperwork to be filed. That said, you should be aware that sole proprietors aren’t protected from liability regarding their business’ obligations.
Because of this, a number of people choose to use a limited liability entity instead. People who own these businesses don’t have personal liability regarding the obligations of the business.
LLCs are more flexible and involve less reporting and record-keeping than corporations. If you’re planning to involve outside investors, though, you might want to register as a corporation.
2. Nail down a business location.
LLCs and corporations are both formed through the filing of paperwork in the appropriate state.
With most types of small business, you’ll have an easier time filing documents in whatever state you live in. This helps avoid additional costs and legal complications. You might want to use business PDFs to keep track of your paperwork. By using conversion software to turn your documents and screenshots into PDFs, you’ll keep everything easily accessible in one place.
3. Decide on your name.
Don’t go with the first name that pops into your head. Your business name is important, and you should take some time to come up with the best option. An ideal name will do the following:
- Help with business marketing
- Minimize your chances of being accused of trademark infringement
- Increase your chances of snagging a domain name matching your business
- Comply with state laws requiring LLC and corporation names to be different for every business in the state
After you have a name or a few names in mind, do a Google search to find out if any businesses have similar names. In addition, you can search the U.S. Patent and Trademark Office website to see whether there’s been a business registered with your name. Most states will let you search through registered business names simply online.
4. Nail down your domain name.
The second you decide on your name, you should have your business registered with a domain name. Domain names refer to your internet address. To check whether your ideal domain name is available, type it into your Internet browser’s address bar to see whether a website already exists.
A number of different companies allow domain name registration. All you have to do is create an account, explain what name you want registered, and give an annual fee.
When you’re working on the business naming and domain naming process, it might help to get all your ideas consolidated into one PDF by using conversion software on your documents.
5. File the required business formation papers.
When you’re putting your documents together, you’ll be greatly helped by keeping business PDFs with all your information in one spot. These easily-accessible files will let you know what forms you’ve completed, along with what forms still need to be finished.
If you form a business entity, you’ll need to file documents with whatever state agency is responsible for handling business filing. In addition, you’ll be required to pay a fee for filing. The exact fee varies depending on the state. After your LLC or corporation is officially formed, you’ll be given a certificate that confirms the existence of your business.
6. Get your finances set up.
The IRS website will let you obtain a federal tax ID number. If you’re filing s a sole proprietor, or your LLC only has one member, you can use your Social Security number as your tax ID number.
When you start your online business, you’ll need to open a bank account for the business. If you intend to process transactions with your business website, you’ll also need to set up a Paypal account or register with another type of online payment service.
7. Become familiar with licensing and sales tax requirements.
If you sell items online, you’ll probably need to collect sales tax and pay it for any state that your business is physically present. The procedures for tax collection are slightly different from state to state, as are the tax rates. Your best bet is to get in contact with your state’s taxation department or an experienced accountant who can explain your responsibilities.
Check with your county or city office to find out whether you’re required to have a business license. You may also be required to register some kind of fictitious business name.
8. Put your website together.
Before your website can go live, you’ll need to invest in web hosting. Typically, this will be offered by the same company that provided you with domain registration. Web hosting is a way of giving your website a space to thrive on the web.
People can set up websites on their own, but unless you’re a web developer or designer, there’s a lot to learn. If your budget will allow it, you might want to hire a professional web developer to help with:
- Making your site layout look how you want it to
- Including the features you want to use
- Creating a logo and inserting it
- Using content that helps with search engine optimization
- Creating text and images
You may need to speak to several professionals about this. A web developer can handle the coding, a graphic designer can handle the aesthetic, and a content writer can help populate your site with relevant content.
The Final Takeaway
After you’ve made sure all your legal paperwork is taken care of, created your business presence, and figured out what you’re selling, you can start making online business transactions.
You should be aware that the internet is a busy, highly competitive place. You’ll need to be proactive about reaching out to your customer base. Research social media, online advertising, and email marketing campaigns to tailor your marketing approach to your ideal clientele.
By Katherine M.