Steps to Starting an Online Business 21

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 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.

About the Author Milton Zlotnick was the founding and managing partner of a midsized CPA firm in NYC before joining, LLC. He served for a number of years on the New York State Society of CPAs' Financial Planning Committee. He is currently a Community Leader and Host for AOL's Business Know How division, providing advice on business… Read more »

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Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.

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  • Gladys LaGasse

    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?

  • Chelle Parmele

    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.

  • Laura

    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?

  • wilson

    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?

  • toroz

    Amazing software, very important for every people to start their business.

  • mercy m w

    I am a Kenyan (U.S President’s-Obama country of birth)can you please tell me how can I earn cash by having a website for tourists who should log in and get nice places to visit in Kenya and maybe give them a little more information on what they expect when they come here???

  • Tatyana

    It is really very important to find out all the small issues before you start something.

  • Ntambirogers

    hey am looking yo open up a business on electrical appliances Tvs ,stereo,DVS, COOKERS ETC FOR SALE. In UK Where and which companies shoud i coborate wiyh so as they can sell me second hand equipments?

  • Ntambirogers

    What are the requirements for starting opening up a business web site

  • lou

    Hi i want to start a mail order business marketing and selling how-to information about starting your own business on line, also electronics. How would i get started, what would I need to do. I have little internet skills at this time. Can you help me?

  • john

    ok what im looking to do is open a small pet store online nothing to big i plan on it growing but i need help getting it start i need to know about the business lic and also how much i have to pay for it i live in il

  • Courtney

    I am looking for a website designer for a site I would like up by the end of the year. I am looking for someone to do it for free. I know thats a bit much but I am unemployed at the moment. I can pay for domain registration and hosting.

    Heres the info on the site idea : Real-Time Public Billboards

    The mini pitch: “Your ad anywhere. Right now.”

    What it is: A network of billboards, news stands and projectors linked to a single website that allows regular people just like you to place adverts in public spaces. Think of the “one million pixel” site but outdoors.

    How it works: You register, upload your advert, choose a location, hit go and see a live webcam feed of your ad displayed in any public space in the world.

    Why it’s hot: The cost of billboard advertising is prohibitive to most small businesses and individuals. A public, global, mini-billboard network of ads for regular people and businesses that updates at the click of a mouse could earn megabucks. Make it work, and I’m sure Google would want a word with you too.

    Where the money is: Simply charge a flat fee or monthly recurring cost to place an ad. You could split your electronic billboards and projectors into small segments, or sell the whole space or network to one advertiser.

  • Chuck bartok

    Based on the comments above, there are many question to be answered before a person invests too much capital (time, energy and money)
    We are conducting a very interactive Webinar series weekly for the next 5-6 months Building a Web based Business From Scratch.

    Click on my name and visit the site and join us …

    It is a group effort and we will have a viable Profitable business at end of exercise and BY BEING an Active participant..your skill level will be enhanced

  • Jim Jinright

    The internet marketing model is very compelling because of the low cost of entry. The appeal in this bad economy is that you can start a business with minimal expense. The opportunity is that you can collaborate with outsourced teams and market around the globe.

    The issue is that web 2.0, internet marketing is very comprehensive. In my case I spent over $35,000.00 in training and about 3,000 hours of study. You really need to be cautious and stay clear of the so called “get rich quick” schemes that are going around. Conversely, if you have a long-term view of your business then an online business can be a dream business.

    It’s not that internet marketing is overly complex but rather that there is much to learn. My recommendation is that you outsource what you can or be prepared to learn the business. It’s a perfect business for people that have more time than capital but the successful online marketers tend to outsource for maximum efficiencies.

    The webinars should be very helpful to people. This online business boom more like a information age revolution. Many people believe that what’s occurring now with web 2.0, internet marketing and social media will rival the industrial revolution!

    • Sheila Williams

      Some of the questions asked are of importance to me . How can I get answers ? Questions were posted but no answers were given. Especially questions of how to set up to receive payment for an online business. I’m interested in starting a continuing education business on line, how can I get more information?

      • Chelle Parmele

        I think that’s a really great question, Sheila.

        Most of the questions asked in this forum are questions that have already been answered – in the article in question or by resources found on the website. We try and point out as much of this as possible. If there’s an additional resource outside the website we can offer, I will make sure that happens. Otherwise I let the question stand to see if any of the other readers have some good advice to offer.

        A lot of times it’s in how the question is asked. For instance: “how to set up to receive payment for an online business” Does this mean you’re looking for a payment system like PayPal or an e-commerce cart system? Or how to set up and track that information in your business plan or accounting.

        There are a lot of great resource, information and links to outside assistance on this website so please keep looking through. I believe you’ll find the information you’re looking for!

  • Pingback: How Tos: How to Start An Online Business « EntreprendreToday

  • Ashley

    I totally agree with making a business plan first, this article reminds me of the one I read at they also have a good list of legal assistant companies and freelancer organizations..etc

  • Donna Vincent

    I would like some information regarding owning a web store only, with no physical business location other than my home. If the town I live in can charge me personal property tax? IE: home embroidery machine, and laptop computer I use to conduct my business.

  • Pingback: Start An Online Business With The Help Of Business Law Attorneys | Gorilla Lawyer - Pittsburgh Attorney Directory

  • Don W.

    Very nice article. My one addition would be to emphasize that if you have an idea for selling downloadable files, go with it. That’s because unlike selling “real” products online, selling downloadable files requires no investment in stocking and shipping products, 100% of the selling price is profit (since you’re simply selling a copy of an electronic file), and your site can be set up to be fully automated (no work on your part for a sale). There are several hosts that can make this type of site possible. The one I’ve found that I like is MadBeeTech at They’re a web host specializing in setting up sites that sell downloadable files. Fully automated, and just five dollars per month.

  • Josephine Victor

    It is very useful all new entrepreneurs who wants to start his or her own business. Most people fail in business because they make avoidable mistakes!

  • http://....RenellsExclusive... stanley king

    Hi, im im looking to set up an online retail business mainly for women, this will be homebased in the UK….need lots or all information on how to start or possibly get this amazing of the websites with domain name etc….been traveling extensively to North America and to Asia, so ive got a fair idea on buying & selling in the retail industry

    Help needed please :)