Starting New Business~ Questions about What is Necessary

[allathlete5]

Hello All,

I am new to the community! I am a college student, computer science major. Not entirely sure this is in the right section, but here i go.

I have a few questions regarding starting a new business that is ecommerce based. Right now the business has a cheap/free website up, and a facebook fanpage. Everything is done in person. I am looking to change that. I want to make this a business based around a website and its shopping cart. Where people can buy my products online. What I am trying to find out is what i need to do legally to get this going, what will i need to get my business up and running? I have found a webhost that i will be using. I plan on building a website then initially use something like osCommerce for my cart. But I do not know where to go from there. I originally planned on using paypal as the method of payment. What kind of things will i need? Do i need to register my business with the county or state? What kinds of certificates do i need to get? Will I need to begin filing tax's? Is that completely necessary? I've never had a job before and am very knew to all of this. I am currently trying to sell to my community (school), friends, and family, BUT think that i can eventually get this going to consumers all over the nation. I am basically just trying to be a sponge right now and understand everything i possibly can about this. I am very eager about pushing my business, especially getting it online. I am looking for all comments and suggestions possible!

Thank You,
Justin

[dpd1]

You're going to have the Dudley-Do-Rights tell you that you should immediately go out and get a business license and all that. Me personally... I would not do anything. Unless you have some incredible idea, you probably won't be making big money to start. Deal with the extra income at the end of the year on your taxes and you're good. If you start screaming from the rooftop that you're starting a business, the government does everything they can to drive you crazy. They'll instantly want you to start doing quarterly taxes and all kinds of nonsense. Just do it... Make some money. Go from there. Just keep records of all the money you spend.

[jwolthuis]

I second that. Do not immediately register your business or form a corporation. While it sounds exciting, it's not. The days of corporate write-offs, or hiding behind the blanket of corporate protection are gone (if they even ever existed).

Track your income, expenses, and inventory, keep records, and go from there.

But once you file paperwork with your county, state, or federal government, the paper train starts, and there's no simple way of getting off. You'll drown in a sea of monthly and quarterly filings. And once you hit a magic threshold, you get to file weekly.

Been there.

[rocknbil]

The web site is just one point of marketing, though it may be the main one, it's just one tool.

Start with a business plan. Your business plan will contain all the elements, including the legalese and licensing. Model it after many of the examples out there.

- Dudley

:-)

[LifeinAsia]

The days of corporate write-offs, or hiding behind the blanket of corporate protection are gone (if they even ever existed).

Can't speak for the protection side (never really felt it offered that much protection against a concerted lawsuit), but legit tax deductions are alive and well.

Trying to abuse the system will often come back to bite you. But there are lots of valid and legal deductions still available.

More paperwork? Yes. More hassle? Perhaps.

That said, jumping into a corporation before you make dollar 1 isn't necessarily the smartest thing to do. You need to have a long sit-down with a tax advisor and/or a lawyer. Your college should have some resources for free or low cost to get you started.

I've never had a job before and am very knew to all of this.

You mean you've never even had a part-time job working at Mickey D's? This is a red flag to me. It's very hard to work for yourself if you've never even worked for someone else. And if you grow and have people working for you- sounds like a recipe for disaster.

I would strongly advise you to add some business classes into your schedule. Even though classes are nothing like the real world, they are certainly better than no experience at all.

[allathlete5]

Well what i am doing is getting authentic jerseys and newera hats at wholesale prices and selling them... i go to a private school on the east coast that isn't really cheap unless you get somesort of scholarship... so most of the kids besides me have money.. i make a little bit of money.. actually within the first 2 weeks ive made quiet a bit of money, but maybe thats because i just started.... anyways when is the point i should start filing tax's? And when you said it could come back to bite me in the butt then what do you mean? what could happen to me? I am very OCD when it comes to the paperwork... Ive made lists and sheets and am very organized when it comes to peoples orders, getting in a ton of information and keeping it all organized.. Just started invoices aswell...
And i do plan on creating a business plan, but since everything will be online for me... I am curious about the legalities i need to confront there.. like what kind of licenses i need and stuff like that... I've been doing a ton of research and can only seem to find stuff from a few years ago, and i am trying to find what the laws are NOW.. Like what exactly do i need an SSL certificate for? What other things like that will i need?

No i haven't had a part-time job and it raises a red flag for me aswell... Ive never been able to have a job time wise in highschool.. besides things like umpiring youth baseball games and giving private lessons for both baseball and football... In highschool I was a student-athlete in one of the toughest cirriculums in the California education system.. That but together with two sports just didnt allow me to have an actual part time job... what i had to do was find little things like wash cars, design websites, and umpire to make money.
But the thing is i do not plan on having this little business skyrocket to the point i will need people working for me..
At school right now i am a computer science major with a business minor... I am actually enrolled in business classes which i believe will help.
I'm just looking for all the advice I can get right now! So please keep it coming!

[HRoth]

The biggest legality you need to worry about is declaring the money as income to the IRS when you file. Since you are OCD, that's good. There are a couple good books about keeping track of business deductions. You can, for instance, subtract the percentage of the rent and utilities you use for your business from your business income. NOLO has good business deductions books that show you what you can deduct. A lot of the info is even for free on their site. That will help you to know what you need to keep track of. If you are going to take Paypal, you don't need to worry about stuff like SSL. Just read what Paypal has to say about putting up some paypal buy now buttons and whatnot. That's plenty to start with.

I would not worry too much about the fact that you have not had a job. You have been a student. That is the same thing as working, only you get paid in future social benefits instead of in wages here and now. As a student, you need to show up on time, do the work, be polite, and be ethical. All those skills are transferable to retailing. The biggest stumbling block to working for oneself is making oneself work when goofing off is more attractive. But that doesn't mean you should allow your business to consume your life, especially since you are in college. Hopefully, you will only go to college once. You have your whole life to be in business. So keep your priority schoolwork and the college experience. Good luck.

[LifeinAsia]

As a student, you need to show up on time, do the work, be polite, and be ethical.

Man, where did YOU do to school? ;)

I have to disagree about school and a job being the same. Except for the few items mentioned, they are completely different. I don't know of anyone who had classes 8 hours/day, 5 days a week. And forget about 2 weeks off for Christmas (let alone months off during the summer)!

And when you said it could come back to bite me in the butt then what do you mean?

If you claim dubious deductions that are later disallowed in an audit, you will not only be responsible for the back taxes and interest, but possibly penalties as well.

what i had to do was find little things like wash cars, design websites, and umpire to make money.

Ah, then you've already been in business for yourself. Now you're just stepping up the game. That experience will definitely help. <lowers red flag>

[dpd1]

If you know nothing about taxes, then just go to a tax person when it's time to do taxes for this year. Tell them what you did and they'll know what to do. Or have your parents figure it out. After that, if you keep doing it, they may want you to pay quarterly taxes from that point on. Depends on how much you make.

[piatkow]

I am actually enrolled in business classes which i believe will help.

I would hope that these have covered basic book keeping. If not then buy a basic text book and read it. Getting the record keeping right is the key to a happy (or at least non confrontational) relationship with your tax man.

[HRoth]

"Man, where did YOU do to school? ;)"

Heh. I should have said you need to do that if you want to succeed. I did plenty of cutting, not studying, and snarling at professors, for which I got bad grades.

Although being a student is not a 9-5 job, don't forget that you have to do homework. It is very much like a job, although I would say that high school is more like an hourly job and college is more like being self-employed. I never was a merchant before I opened an online shop. Worked in stores but just as a stock clerk and had no idea how they were run. Having been a professor for a decade was surprisingly a real help. It's not the same as being a student, but for both, you need self-motivation and organization or you will not succeed, and to be really good, you need creativity. I think these are all qualities that are vital to being a merchant.