Did you know that starting your own online business is actually quite easy? It’s coming up with great ideas that requires a little more work and time. But legally setting up a new business really just takes a few minutes for someone who knows what they’re doing.
I was lucky that a friend of mine was able to walk me through the process to let me know what all I needed to do to create a legal business. In case you’ve been wondering about that too, these are the steps I took to create mine.
1) Create an LCC, Corporation, S-Corporation, etc.
If you google “Secretary of State [Insert your state]” and go to their website, there should be a link to find all the information you need. On Missouri’s there is a tab that says “Start a Business.” This link tells you how to apply online for the type of business you want to start. I consulted an accountant for this step just to make sure I filled out the forms correctly. You should also use this site to research business names in your state to make sure the one you want isn’t already taken before you fill out the application.
2) Apply for a Federal ID Number
You can apply online for an instant Federal ID Number at IRS.gov. You will use this number to file taxes each year and to verify that your business legally exists when you are doing business with other companies, establishing a business checking account, etc.
3) Apply for a Sales Tax Number from your state
If you’re selling retail, this is required. Most real wholesale websites will not let you create an account without one. This just ensures that you are responsible for collecting sales tax on the products you sell and can turn them in to your state. It took me a little longer to get this number. I was able to apply online, but had to mail in a bond to cover any future unpaid sales tax and it took about 2 weeks to get the letter that assigned me a sales tax number in the mail.
4) Open a business checking account
This isn’t required, but it is extremely helpful in keeping your accounting records straight once you get started and keeping the business money separate from your personal finances. Once you start making money, you can withdrawal whatever amount you like to start paying yourself. I typically write a check from my business account to my personal account to pay myself. I linked my business checking account to Quickbooks Intuit and it has made the accounting process so easy. I also think it’s helpful to make as many purchases as possible with your debit/credit card that is linked to this account so that you have an online record of them instead of having to keep every single receipt.
5) Decide on a shopping cart service
There are many shopping cart services to choose from out there, including selling your items through Amazon, eBay or Etsy, but I do recommend creating your own website as well so that your sales aren’t dependent on the decisions of those companies. I use Shopify which has multiple plans to fit your needs and your budget. You can also host your own shopping cart on a website platform like WordPress. There are a lot of options out there, so be sure to do your research to find one that is the best fit for you.
6) Purchase packaging, labels and stamps to ship products
This is something I admittedly didn’t think about until AFTER I made my first sale, which was a mistake. I ended up going to the post office, purchasing a box from them, then stood in line to get my package stamped and shipped. As soon as I got home I headed to uline.com to purchase packaging (they have all sorts of options to best fit your products), purchased adhesive shipping labels from Amazon, and set up an account with Stamps.com so I could print my own labels (shipping costs included) directly from home. This allows me to prepare everything at home and just drop my packages off at the post office at the end of the day. Places like Office Depot also let you drop off your packages with them and USPS, Fedex, and UPS will come pick them up at a determined time each day. You can also ship priority mail and schedule a time for the USPS to come pick up the packages for you. There are a lot of different shipping options, so this is another one that requires a little research to determine the best fit for your business.
7) Find wholesalers or manufacturers
Finding REAL wholesalers is actually a lot harder than it seems. Google generally brings up hundreds of companies that claim they are wholesale, but are really just discounted retailers. That is not who you want to be buying from. Talk to trusted friends or connections in your industry to find out about legitimate wholesalers, or check the tags of the products that you like and research the brands that way. Just be prepared if you consult someone who would be a future competitor, they might be a little tight lipped.
If you follow these steps you’ll be well on your way to owning and running your own online boutique. There is still a lot of other work to be done like product photos, marketing, finding your ideal customers and delivering a great buying experience to customers, but you’ll be learning all of those things before you know it!