Legal Steps Required to Start an Online Business

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Starting an online business might not seem so difficult, but there are legal steps you should  follow to make sure you have all the requirements sorted out.

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The term online business is broad enough to include a variety of activities, such as selling your own products (hand-made jewelry, for instance), re-selling other companies’ products, or becoming an influencer who accepts brands sponsorships.

Moreover, you don’t need any advance knowledge to start things up. As long as you know how to set up a website or a social media channel, you can consider yourself “in business.”

Even better, an online business is easy to manage, is low-cost, and offers a certain degree of flexibility that cannot be found in brick-and-mortar businesses.

However, this doesn’t mean there won’t be any difficulties or that you, as the owner, don’t bear some legal responsibilities just like other entrepreneurs.

Therefore, before you start thinking about building your business online, you need to make sure you have all the legal aspects sorted out.

 

Common Legal Aspects of Owning an Online Business

 

Similar to starting other types of businesses, it is always recommended to consult with a professional law firm like Heer Law. They can help you with the specifics of your business or company setup, and provide proper guidance for the more difficult parts of the process.

That said, there are some common legal aspects of owning an online business you should keep in mind and address when starting your business:

 

#1: Identify the Business Structure

 

Many online businesses are under a sole proprietorship, but it all depends on the type of activity you want to perform and the number of partners.

If you stick with the sole proprietorship, it may be easier to organize the start of the business, but you are also the only one bearing the responsibility in front of the law.

To limit your liability opt for an LLC (limited liability corporation or company). This type of business structure protects your personal assets in case things go wrong (it’s best to be prepared for the worst case scenario).

However, there may be some extra costs involved for an LLC since the legal process is a bit more complex. You'll want to consider that process carefully.

Also, since the various business structures' application forms and rules are different from state to state, it’s best to talk with a lawyer to make sure you’re not missing on any important details.

 

#2: Find a Suitable Name

 

When you register your business, you will have to submit a name. So, it’s best to think this step through since it will be representing your brand.

Look for a name that’s easy to spell and remember, but also that’s unique enough to differentiate your business from competitors.

Also, make sure to check the state law requirements about business names.

 

#3: Domain & Hosting

 

Once you have a registered business name, get the domain and hosting for your future website. These elements are necessary online, so make sure to get high-quality hosting with good customer service and options for growth.

Quick tip: If you’re absolutely sure of the business name, you can buy the domain before registering the business. This way, you can make sure someone won’t come in and swoop your perfect domain name right from under your nose.

 

#4: Sales Tax & Licensing

 

If you plan on selling products online, you may need to get a license for collecting and paying sales tax (for each transaction).

However, the licensing rules are different from state to state, so check with the local authorities or the lawyer you hired to help get the business off the ground.

Additionally, you may want to talk to an accountant, to see how you can organize the process and if there are any loopholes to consider.

 

In Conclusion

 

While starting an online business doesn’t seem so difficult, there are legal aspects you must take care of to operate smoothly and legally.

Additionally, you need to learn how to promote your business or startup and how to build a reliable team that can support your dreams and vision.

In the end, online businesses are similar to brick-and-mortar businesses in many ways. They may be just as much work to grow as a brick-and-mortar one, but also present some distinct benefits.

Take care of the legal aspects of your online business and you’ll give it the best possible chance for success.


Sarilaya Cada is a freelance content writer. She is interested in a wide range of fields, from education to project management, business and engineering.