The Nuts & Bolts of an Online Business:
Online Business Administration
For the most part starting a business online is relatively inexpensive and easy to do. But there are number of “icky” areas (like taxes, accounting, and taxes) that come with starting a business (whether offline or online) that you must address to get a solid start.
DBA or Corporate Entity
If you’re a one woman business and solopreneur in the United States, you might be thinking that a registering for a DBA (“doing business as”) or filing a corporate entity for your little online business is unnecessary. Think again.
In most states, unless you are receiving all of your online business income under your legal name, you are required to file for a DBA, also known as a fictitious business name. This means if you are going to call your business Laura’s Online Lace Shoppe and receive payments under that name, but your legal name is Laura Jones, then you need to register a DBA for your business’ name “Laura’s Online Lace Shoppe.”
Doing this will prevent you from incurring fines from your state or local business regulators. And, it will help prevent business banking and tax issues. Obtaining a DBA is a simple and straight forward process that is free in some states, so if you don’t plan to incorporate do yourself a favor and register your DBA immediately. Click here to view a chart that provides the requirements for fictitious name filing in all 50 states.
Choosing a Corporate Entity
Should you establish your business as a C corporation? Or, do you have a partner and want to file as a Partnership? What about becoming an LLC, is that a good fit? The nitty-gritty of selecting a corporate entity is beyond the scope of this article (and it brings back bad memories of my life as a lawyer), so we will not get into those details here. Nevertheless, I highly recommend that you give this process the attention it deserves and file for a corporate entity that best meets your needs.
Not establishing a corporate entity can lead to tax and liability issues down the road. Don’t let people tell you that having a one-woman online business isn’t risky enough to incorporate. All business is risky, and you should take every opportunity to protect yourself. It is just what young, smart, and sassy female online entrepreneurs do!
Besides, not only can you open yourself up to potential personal liability when you fail to establish a corporate entity, but you limit your ability to scale your business towards future growth. Whether you plan to stay a one woman show or not, it is typically in your best interest to incorporate your business.
If you plan to proceed without legal counsel in this area, I recommend NOLO’s Legal Guide for Starting & Running a Small Businessby Attorney Fred S. Steingold. NOLO has an incredible set of legal resources in plain English that can help you navigate these areas. I like their resources so much that I use them myself…and I’m a lawyer.
Permits, Licenses, and State Regulations
As if you don’t have enough on your plate trying to launch your dream into reality, there may be state and local regulations that you need to comply with before you start conducting business online. This area of evaluation is completely locale-specific.
For example, some cities require that you file for a license if you are going to work from home depending on the nature of your business. Other cities require that you obtain a permit to work from home. And don’t forget if your online business sells physical goods, you will probably have to collect a sales tax. The possibilities are endless and vary from state to state, so take the time to determine which, if any, of your local regulations apply to your online business and comply with them. Click this link to find the regulatory agencies that govern these matters in your state.
Taxes, Accounting, and Business Banking
Ugg. I hate this part of business. I don’t mind paying taxes. I just mind the preparation and record keeping involved in the process. I’ve made the mistake of doing my own taxes two years in a row. All has fared well except for the fact that I’m suicidal for week. If you can afford (or aren’t too frugal like me) to have some else do your taxes and accounting, do it!
On the other hand, if you are looking to reduce overhead at all costs (and are a slight masochist), the following advice will make the burden somewhat less unbearable. But just by a little. First and for most keep good accounting records, I suck at this. I’m so lazy about managing my bookkeeping on a consistent basis. This hurts me and I know it, so I’m getting better at it (I really just need to bite the bullet and outsource!).
Anyway, keeping good records not only makes tax time a breeze, but it helps you keep an eye on your numbers. Knowing your numbers is critical to online business success once you generate a significant amount of income. The more you know about the financial details of your online business, the better you will be able to manage it. Plus, you’ll be in compliance with government regulations and that is always a good thing.
Clean accounting also makes it easier for you to attract investors if you need them, or borrow money from the bank to grow your business. If you’re like me and you hate this work, look for a reliable company and outsource the responsibility. Because I’m not taking my own advice, I can’t refer one from experience but I have heard good things about Brickwork India. I promise to take my own advice this December.
Trademark, Copyright, and Internet Law
Believe it or not intellectual property issues are a major hot button when it comes to running a business online. What’s worse is that many of the issues are sneaky. For example, you could inadvertently purchase an expired domain name that violates the 1999 Anti-Cybersquatting Law. Or, your business name or domain name could be considered trademark infringement even though your products and services are seemingly unrelated.
Avoid legal issues by doing some preliminary research with the US Trademark and Patent office to ensure your business name and trademark are not already in use. If you feel like you can’t handle this on your own, seek legal counsel or refer to NOLO’s Legal Guide for Starting & Running a Small Business for assistance. The last thing you want to do is build your online business and online brand on someone else’s property!
Good ol’ Administrativa
Just like our men, we can’t live with or without the administrative functions of our business. If you’re going to run your online business with potential for sustainability you will need to get a solid handle on all of the above. And keep in mind that depending on the type of online business that you start there may be other administrative concerns not mentioned here. Can you think of any I missed? What are some administrative functions specific to your desired online industry? Let’s talk about it in the comments below.
Ready for more online business startup info, check out Part II – Online Business Operations.