Okay. Now you have found your profitable niche. You researched the market. You found suppliers for your product line.
You are FINALLY ready to get started building a store.
As I mentioned in the last article, you now need to get your financial and legal ducks in a row.
You should spend some time learning about the different options you have when starting a company. You can start out as a sole proprietorship, you can incorporate or you can start a LLC. All three have pros and cons to consider.
5 Legal & Financial Components Required when Starting an eCommerce Biz
In this article, I am going to list the major legal and financial entities you need to have in place to run your eCommerce business.
1. DBA – “Doing Business As”
You must register the business name you are planning to use. You can also go to the next level and incorporate and there are many good reasons to do this as well.
This is an important step because your name communicates a lot to your customer. Some people use a “parent company” concept for their legal and financial setup. However, keep in mind that when your customer is billed for your product, this is the name they will see.
Find out more about filing for a DBA at Business.gov.
2. FEIN – Federal Employer Identification Number
No matter which legal entity you decide upon, you need to make sure you file for a Federal Tax ID.
Go to the Federal IRS website to learn more about these requirements.
3. State Tax ID
Each state is different, but your State Tax ID is critical because all suppliers will require it.
Be sure you research and understand all of your legal obligations when it comes to taxes.
Business.gov has a great set of tax guides to educate you on this topic.
4. Checking Account in Your Business Name
I highly recommend Harris Bank. They cater to the small business. Any bank will require all of the steps above to be completed before opening a business account.
It is important to keep your business finances completely separate. Also, when applying for a Merchant Account, they will open the account with the name on your checking account. Again, this will be what your customers see when you charge them.
5. Merchant Account in Your Business Name
It’s okay to accept PayPal – you should. But do not allow that to be the only payment type you accept.
If you are serious about your business you must accept the major credit cards.
I found a company that makes signing up for a merchant account easy and painless: Advanced Credit Systems.
Educate Yourself
I know this can be a complicated topic, but you need to learn enough about sole proprietorships, corporations and LLC’s in order to make an educated decision about what will be best for you and your business. An attorney can also walk you through this decision. There are also several companies that will help you with filings for a fee.
Some sources of information on the legal and financial aspects of starting your business:
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Jenn Cangelosi is owner of 
Kristie, thanks for the article. We are going to sell our first grammology products in a few weeks and your article will be a great reference.
Dorothy from grammology
http://www.grammology.com
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Thanks Kristie!
Your article has some great tips for those starting up a small business. I totally agree on educating yourself on the ins and outs of small business. If you get things right to begin with then there will be less problems further down the track. That may mean consulting an attorney but look at it as an investment in your future.
Best of luck everyone!
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