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Steps to Establishing Your Ecommerce Home Based Business

Ecommerce Home Based BusinessEstablishing your Ecommerce Home Based Business legally requires a lot of time and effort.  I would strongly advise that you talk to a Tax Attorney and an Accountant when you set up your Business.  This article is only intended to provide you with some basic guidelines, and it is not meant to be legal advice.

Here are some very important steps to consider when establishing your Home Based Business.

You will have to determine the Business Structure you want to use, Sole proprietorship, Partnership, or Corporation.  The majority of Small Ecommerce Businesses use Sole Proprietorship.  Please be aware, when you choose Sole Proprietorship, if you are ever named as a party in a lawsuit, your business and personal assets could possibly be at risk if the judgment goes against your business. 

The Business Structure also determines the tax forms that you are required to file with the IRS.  The IRS provides a very detailed Small Business/Self-Employed Virtual Small Business Tax Workshop on their website.  Please check out this free video, it contains great information.

At this point you will need to choose a relevant Business Name.  This will take a considerable amount of time.  You can use your name and then choose Sole Proprietorship as your Business Structure.  Some people like to brand their own name and build their business around that.  The one person that comes to mind that has done a fantastic job of branding his name is John “Colder Ice” Lawson

Right now there is a big push towards transparency in Ecommerce, so branding your name could work out great for you.  One word of caution though, Identity Theft is rampant on the internet so consider this if you use your name.  Another drawback to using your name is that it would not be very search engine friendly in the beginning.  However, overtime with the right marketing plan, your name would be picked up by the search engines.    

If you do not use your name, try to select a business name that is easy to remember and immediately gives an impression of what your business is about.  You will want to incorporate your product type into your Business Name if you can.  Here are some examples, Annie’s Antiques, Cathy’s Collectibles, Clyde’s Comic Books or John’s Vintage Toys.  You would not want to use ABC123 as a Business Name. 

I would advise against using cute names or current expressions that can lose popularity over time.  Also avoid using cute misspelled words like Kids Klothes.  A Business name should be easy to pronounce and remember.      

Once you decide on an Ecommerce Business Name do a Google Search on that business name.  You will have to research this name to see if it is available and not being used by another business.  When I do a Google Search, I first enter the name without any quotes.  Then I would type the name in quotes, next I would take out all of the spaces between the words and leave the quotation marks. 

Next I would go to the Secretary Of State Offices Website and search the registered Trade Names.  I would also go to the U.S. Patent and Trademark Office and do a USPTO Trademark Search to see if the Business name has already been federally registered.

After all this research and you believe you have an appropriate Business name, go to GoDaddy.com or Name Cheap.com and see if the domain name is available.  The next step would be to contact your County Clerk’s Office.   Have this Office check to see if another Business in your area has already filed that Business Name in your county.  If the Business Name is available, buy that domain name immediately, because it may not be available later.   

Once you have decided on your Business Name, you should file for a Federal Employer Identification Number (EIN).  Even if you establish your Business as a Sole Proprietorship, you may need an EIN when dealing with other business.  You will use your EIN to open a Business Account at your bank.  To get an EIN online, go to irs.gov and enter EIN as the keyword and fill out the form.  You will receive your EIN within minutes.  You can also fill out the SS-4 Application for Employer Identification Number and either mail it, fax it, or submit the information by phone. 

If you do not use your real name for your Business, you will have to file your Business Name at the County Court House where your business is located.  Depending on your State, this is called Doing Business As (DBA), Assumed Name, or Fictitious Name.  By filing your Business Name, you prevent other businesses in your county from using your chosen Business Name.  You may also be required to publish a DBA Statement in your local newspaper.  You should contact your County Clerk’s Office for the specific requirements for your area.

You will also be required to register with your State to get a Business Tax Number so you can collect sales tax for the items that you sell to buyers in your State.  You will have to contact your State Department of Revenue to get the required form and information to file. 

You will have to contact the proper authorities for requirements on obtaining Local Business Licenses and other Local permits if they are necessary for your area.

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