How to Start a Business on the Internet: Lesson 1
Before we get started with the process of setting up a business online, here are the common steps to creating your business entity offline. Check with your city, county and state for specific requirements. Some include a link where you can find additional information.
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. There are other entities, but these two are the most common.
1. Corporation
You can file a corporation with your State. Most states have forms online that you can either download or print. They also have instructional forms that detail what goes where, and what everything means on the forms. Once you complete your forms, mail them in with your fee ($90 up), and you're a corporation! You get our official copies back in a couple of weeks. Consult an attorney if you need assistance.
2. Fictitious Name
This is a simpler way to register your business, but it does not afford you the protections that a corporation does. Get the fictitious name statement form, fill it out and send it in. The fee isn't as much as a corporation, but the neither is the liability protection in case someone decides to sue you.
In some states, this is called a DBA (Doing Business As), and is obtained from your local County Office building for a minimal fee ($9 up). If you're not sure which way you want to go, see an attorney or accountant. This is one of the most important decisions you make!
Obtain an EIN number
Once your business entity is registered, you might need an EIN (Employer Identification Number). Go to http://www.irs.gov for information on obtaining your EIN. The IRS uses this number to identify taxpayers who are required to file business tax returns. There is no charge for this that we know of. If you are a sole proprietor, you may be able to use your social security number in place of the EIN number.
Obtain a Business License
Some states additionally require a Business License issued by the county your business resides in. This takes a couple of hours at the local County Office Building, and costs $20 up depending on your state. Generally, you must show your Business Entity papers and supply your EIN. Some States don't require a county Business License at all.
Obtain a Resale Certificate
In almost every state you are required to have a Tax Resale Certificate if you plan to sell products, services or information. You answer a few questions for your Resale Certificate in about 20 minutes. The cost is anywhere from no deposit at all depending on what you anticipate your initial sales revenues to be to $100 or more.
This is done at the local State Tax Office. When you buy from a wholesale supplier, you are 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 rates because you resell the item (and collect the tax for the State at that time in the purchase cycle).
Open a Business Bank Account
If you're going to do business, you should have a business bank account. You need your Business Entity papers, possibly your EIN and your County Business License, (if required). You can generally open a business account with an initial minimum deposit of $50 or more. Almost all banks offer business accounts. |
