If you own an online business, you can work from anywhere, set your own hours and make a living on the Internet. Online businesses can also have extremely low startup costs—making them perfect for a new entrepreneur without a lot of cash. So here are 5 steps on how to start your business.
Step 1: Choose a Business Structure
When you start a business, you must decide whether you’ll operate as a sole proprietorship, limited liability company or corporation.Sole proprietorship , this is the simplest type of business structure and you don’t need to file any paperwork to set one up. However, sole proprietors have no protection from liability for the business’s debts and obligations.
For this reason, many people who are starting a business choose to form a limited liability entity such as a limited liability company or a corporation. The owners of these types of business entities are typically not personally liable for the business’s obligations.
An LLC is generally more flexible and involves less record-keeping and reporting than a corporation. However, a corporation may be a good choice if you want to bring in money from outside investors.
Step 2: Decide Where to Form Your Business
You’ll form an LLC or corporation by filing paperwork with the state.
For most small businesses, it’s best to file formation documents in the state where you’re located. By doing this, you’ll avoid the added costs of registering to do business in your home state and hiring an out-of-state registered agent. However, if your business will have significant nationwide activity or you expect to attract venture capital, you might consider incorporating in Delaware.
Step 3: Choose a Name
It’s worth taking some time to choose a unique name for your online business. A unique name:
Helps you market your business
Minimizes the chance that a similarly named business will accuse you of trademark infringement
Increases the chance that you’ll be able to get a domain name that matches your business name
Complies with state law requirements that corporation or LLC names be different than all other entity names registered in your state.
Step 4: Understand Sales Tax and Licensing Requirements
If you are selling things online, you’ll most likely have to collect and pay sales tax for transactions in any state where your business has a physical presence. However, procedures vary from state to state and it’s a good idea to contact your state’s taxation department and/or an accountant to find out your responsibilities.
You should check with your city or county to find out if you need a business license or are required to register a fictitious business name or DBA.
Step 5: Set Up Your Website
To get your website up and running, you’ll need to purchase web hosting, which is typically offered by the same companies that provide domain registration. Hosting gives your website a place to live on the Internet.
