I've had a lot of email from people
who know they want to start an Internet business, but don't
know how to put the nuts & bolts together on the business end.
That’s not surprising. It can be confusing,
and there are certain steps to be taken in a certain order.
Without help, you can end up running in virtual circles
for weeks.
Now, please keep this in mind, folks;
I’m not an attorney, and I’d rather not have to hire one
after writing this article. Let me just say that this is
how it works where I live. Your local government may do
things a bit differently, and of course I can’t speak to
this issue for those outside the US. (Sorry!) If you need to,
consult an attorney or accountant. You should, though, be
able to do this pretty easily on your own if you choose.
So, here’s how we do it in Florida, USA.
First, swim to the poolside bar and grab
yourself a nice cold drink. Then…oops, sorry, that’s AFTER work!
Seriously, now, there are five things you
would need in Florida to get started the RIGHT way. It works
pretty similarly around the rest of the US.
1.) File your Business Entity
You need a “business entity.” That
just means you need an official business name that’s
recognized by the government. You can do this one
of two ways.
A.) Corporation: You can file a
corporation with your State. Florida has a web site
at www.sunbiz.org, where we can file a Florida Corporation
Online. I believe that most States in the US have a service
like this by now. They also have instructional forms that
detail what goes where, and what everything means on the
forms. Once we complete our forms, we submit them online
with about a $90 payment, and poof…we’re a corporation!
We get our official copies back in a few days.
B.) Fictitious Name: This is a
simpler way to register your business, but it does
not afford you the protections that a corporation does.
Same thing…in Florida, sunbiz.org has the forms, and we
fill them out and submit them online. This doesn’t cost
as much as a corporation. In some States, this is called a
DBA (Doing Business As…), and is obtained from your local
County Office building for a minimal fee. ($35 would
be an average).
If you’re not sure which way you want to
go, see an attorney or accountant. This is an important decision!
2.) Obtain a Business License
Here in Florida, we are required to have
a County Occupational License issued by the county our business
resides in. This takes a couple of hours at the local County
Office Building, and costs about $30. We must show our Business
Entity papers. In some other States, a County Occupational or
Business License may not be required.
3.) Obtain a Resale Certificate
In almost every State you are required to
have a Sales Tax Certificate (Tax ID Number). In Florida, we
can get a Sales Tax Certificate in about 20 minutes for $5.
We must again show our Business Entity papers. This is done
at the local State Tax Office. When you buy from a Wholesale
Supplier, you will be asked to supply them with a copy of
this certificate. They use it as proof to the IRS that they
are not required to charge you tax on the products they sell
you at wholesale.
4.) Open a Business Bank Account
If you’re going to do business, you must
have a business bank account. You’ll need your Business
Entity papers, your Tax ID and your County Business
License, (if required). Here, we can open a business
account for a deposit of $50 to $100. Almost all
banks offer business accounts.
5.) Open a Merchant Account
The last thing you need is a Merchant
Account. You’ll need everything you obtained in the five
steps above for this one. (Unless the County Business
License is not required in your State).
This is the thing that allows you
to accept credit cards from your online customers.
Without this, you'll get nowhere. Online buyers are
instant gratification junkies. They want it NOW! If
they have to mail you a check, they'll go somewhere
else and buy. Merchant accounts used to cost a
thousand dollars and more to set up. They've come
down a LOT. We just opened a new one for a setup
fee of $150. The Merchant Account will collect
funds from your customers’ credit cards, and deposit
those funds in your business account. The Merchant Bank
will charge you about 2.2% of the amount you charge
your customer’s credit card, plus about 30 cents
per transaction.
Your Merchant Banker will help you
to incorporate your Merchant Account into your
Internet store software.
Well, there it is. That’s the
business end of an Internet business. Sound
complicated? It isn’t, really. The hard part is
waiting for one thing before you can obtain the next!
For more details on this process,
please read my FREE EBook, "Starting Your Internet
Business RIGHT!"
As I said above, these are just
guidelines. If you have questions, please consult
a professional.
