Starting an Online Business

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Martin

Starting any business is a time consuming and frustrating task. Unless you’re the kind of person that only has good ideas, you will go through a LOT of business ideas before deciding on one. Sometimes, you’ll start going down one path and realize that what you want to do is the exact opposite of what you’re doing. Because of this, I recommend that you spend as little as possible until you’re sure you have a valid idea that can build a sustainable business. That’s what I’m doing with my business and I have no complaints. As I mentioned in a previous post, I came up with my idea after reading an article online. Now, I had many ideas before them that ranged from the intriguing to the insane. I won’t go through all my ideas, but let’s just say nothing was too far-fetched for me to consider. Once I settled on my idea I realized that there were many things I had to do in order to be “in business”.

Legal Structure:
Deciding on my legal structure was a time consuming process, but ultimately I think it was time well spent. As I didn’t know much about the differences between an LLC, LP, SP, GP, or any of the other options, I decided to do some research. I borrowed several books from my dad about legal structures for businesses, but ended up turning to the web as I usually do. I won’t bore you with all of the details, but I settled on a Sole Proprietorship for is tax treatment and transparency. Deciding on this structure meant I could use an assumed name for my business, which I wanted. Filing the paperwork for a Sole Proprietorship in Texas is as simple as going online, doing a search for companies operating with the same or a similar name (paying $1 for this privilege), and then filling out a form.

Assumed Name:
In order to get my “Doing Business A”s (DBA) certificate, I had to file an assumed name certificate. The process of filing your assumed name certificate varies from state to state and county to county. In Texas, you have to file an assumed name certificate in each county you intend on doing business in. As I will hopefully be selling in many counties in many states, this sounded like a lot of work. Fortunately, I was able to just register in my home county and I should be fine as it’s my “primary business location”. Filing was as easy as going online and submitting a form, then going down to the county clerk’s office and signing/paying. This only cost me $10.50, which is pretty reasonable.

Bank Account:
If you’re planning on operating a business, even if it’s only a small, part time, or hobby business, you need to get a separate bank account to keep things straight. I did a lot of research online and decided that I was looking for a basic business checking account with no fees. I also wanted a branch near to my house, which lead me to Capital One. To open my account I had to fill out some forms online and then go to the branch to sign paperwork and show them documents. If you’re going to use any name other than your own, you have to bring with you your assumed name certificate (or other legal documents if you have a different legal structure). I made my appointment with my business banker for 10am the following Saturday. When I got to the branch I was greeted by the branch manager who informed me that my banker would be a couple of minutes late. At 10:35am or so I finally sat down with my banker who had managed to lock himself out of his online account. Because of this he had to fill out all the paperwork manually and I had to give him a lot of duplicate information. It was frustrating and I didn’t get out of there until around 11:30am, when it should have only taken about 20 minutes. It was very frustrating, but I did leave there with my business bank account and debit card number, so I was happy. I initially funded my account with $1,000 to ensure I had a decent cushion if I started selling products and it took time to collect payments.

At this point I have a fully legal and ready to operate business, I even have a debit card!

In the next post we’ll discuss suppliers, setting up on EBay, PayPal, Amazon, a website (still working on), and other items necessary for an online business.