Steps to Starting an Online Business
by Milton Zlotnick
Starting an online business is much the same as starting any business. You should go to your local town hall and find out what the requirements are to form a business in your area. Also ask what is required at the state and federal level. In most communities you must register a trade name. If you will operate as a Corporation or a Limited Liability Company other registration requirements are required. Also, if you operate from your home you should inquire about the local zoning laws. All these steps are needed for any business.
Your business will likely fall under the category of a mail order business. Learn about the Sales Tax requirements. If you do not have nexus in another state you can sell and ship merchandise to residents of another state without charging Sales Tax. However, sales to residents in your state will require collection of Sales Taxes and remittance to your state’s Sales Tax Department. The Federal Trade Commission passed a rule in 1975 requiring you to ship merchandise within 30 days of receipt of payment. You must abide by the Truth in Advertising requirements which essentially require you not to be misleading in your ads. For example, when giving a guarantee, you must describe in detail how that will be carried out. It all boils down to the fact that you should operate your business honestly, which, by the way, is an essential key to your future success.
If you are going to be buying inventory for your online business from distributors you should:
- Make sure you are buying from a reputable source.
- Check references and call the Better Business Bureau and Consumer Affairs divisions in the distributors state concerning complaints.
- Try to obtain merchandise on consignment, thus conserving your cash.
- Look into companies that will drop ship on your behalf.
As a reseller you can then offer a larger selection. These techniques can supplement special sales of high mark up items you keep in inventory.
Do a business plan. Visit www.bplans.com. Look at all the valuable resources of information available to you in not only preparing a plan but also to learn how to market your product and how to operate successfully on the web.
Visit a local SCORE and SBDC office near you for free and confidential counseling. Call the US SBA for locations near you.
Hello:
I have a question. Do I need to pay in any state or local tax on an internet business that my customers order online and then the product is shipped to them and I don’t collect any money from them at all?
If I don’t have to collect any taxes. I wouldn’t have to have a tax ID# would I?
Hi Gladys,
That’s a great question. I would suggest first taking a look at the Nolo website, specifically this page concerning Sales Tax on the Internet.
I would also strongly suggest getting in touch with your local SBDC or SCORE office. They would be very helpful in making sure you have the most up-to-date information for your region.
I have not started my website yet because i don’t know what i have to do inorder to start, also my website is just going to be a database services that people pay a general fee to list there items and search for others so the only money i am dealing with it the general fee. Any suggestions on where i should start, i have the web design background but i don’t know how to do the money part with setting up taking credit cards/debit cards or what all i have to do as in getting a permit and what not first, any suggestions?
I am working on a business plan for a free internet media company. I will be designing websites and providing differents types of information for free to my visitors. My question is: In what category do I fall since I am not going to be selling anything?. I plan to make most of my profits through advertising! What kind of taxes am I going to pay?
Hie i am looking at starting a website that people can get information about events,concerts,seminars and conferences happening around SA.Where people can buy tickets on line and also do cooperate bookings.How do i go about it?