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An internet business, at its very core, is still a business.  While internet marketers are able to do without the 9 to 5 schedule, the brick-and-mortar expenses, and some of the regulatory headaches, there are still a number of ways that internet marketers have to fall in line with their conventional counterparts. In most Western countries, especially the United States, business owners have access to a wealth of resources that help them understand their various obligations – both financially and legally. The following are the ten steps that you must take to start a business, adapted from the United States Government's Small Business Administration Guide.


Writing a Business Plan

The number one area that most internet marketers go wrong is in the very first stage of business development. Conventional businesses rely on business plans to convince outside entities to invest in the business, so it is tempting for self-funding internet marketers to skip this seemingly burdensome task.

A business plan is much more than just a document that sums up your business and your competitive strategy – it is also a time where you are forced to be objective and honest. If there are fundamental flaws in your business model, you will catch those flaws during your financial analysis.  Since you are writing the business plan as if a third-party will read it, this is also a good time to refine your “elevator pitch” so you are prepared to give your value proposition to anyone that asks.

Get Business Assistance and Training

For new business owners, the number of regulations and depth of paperwork might seem a little bit daunting – but have no fear. There are plenty of agencies that exist for the sole purpose of helping new businesses. On the regulatory front, every state has their own small business association – and most cities have chamber of commerce programs that walk people through the steps that they need to start their own enterprises.

On the internet marketing front, the best place to seek help is from people that have “been there before” including fellow internet marketers in your area. Most small business advocates don't have specific experience in the internet-niche, so look to Meetup and other smaller groups to find people that share your interests. Many cities have active programming groups and “hacker” meetups for internet marketers and programmers – and this is also a good place to meet future business partners.

Choose a Business Location

Since you are an internet marketer, you can base your business anywhere that you'd like. Most people choose to use their home address for their business location for the sake of convenience, but you might also consider moving to an area without a state income tax to get the enormous financial benefits that it provides. Some people also take their business “on the go” and they rent a P.O. box or forwarding address so their business correspondence can find them anywhere in the world. Many mail companies will open and scan mail that they receive to certain boxes – giving you access from all over the world.

Finance Your Business

Luckily, the start up costs for most internet marketing businesses are negligible. The vast majority of internet marketers choose to fund their own start up. Some internet marketing opportunities do take a significant buy in though. If you are seeking investment from outside, remember that it is always better to secure interest-free loans from friends and family before you start looking to banks and investors. Investors are great, but they will require a significant portion of your equity in your enterprise – and no one will finance your venture if you don't already have a positive track record and a huge personal investment.

Determine the Legal Structure of your Business

For your first internet marketing business, you will probably begin as a sole proprietorship. In a sole proprietorship (the most common type of small business) there is no legal separation between the identity of the business owner and the business itself. This makes taxes and business paperwork much simpler – but it also opens the business owner up to personal liability for business debts... so bad business judgments could end up costing you your house and your credit.

Partnerships are similar to sole proprietorship, but with the ownership of the business split between two or more individuals. Sometimes, this split is even, and sometimes it is uneven, with one or more partners as “limited” partners with limits to their decision making ability within the company.

Finally, a limited liability company is a formally organized company that is registered with the state – and it is designed to isolate the owner of a company from the liability that the company might pose to his/her assets and personal credit.  In order to be legally binding, LLCs should be formed in consultation with a lawyer that can ensure the necessary articles of incorporation are formed.  

In partnerships and sole proprietorships, the income of a company passes through the company so the owners take the proceeds and pay personal income taxes – while an LLC is responsible for corporate income taxes before paying employees (and the owners).

Register a Business Name

Don't stress out too much about your business name. Plenty of internet marketers just use their own name, or they create a generic sounding business name in case they change niches or end up doing business in another industry.

Get a Tax Identification Number

A Tax identification number, or EIN, is important because it is the way that the government tracks your proceeds, your tax obligation, and the money that you owe in withholding because of your employees.

Register for State and Local Taxes

Depending on your state, you might owe particular business taxes based on your industry. You will certainly owe federal taxes – either as a business, or on the income from the business when it passes through into your federal income. Make sure you plan ahead when you are hiring employees for the percentage of the FICA taxes that you will owe the government for each employee.

Obtain Business Licenses and Permits

You need quite a few business licenses to operate in some industries – like waste disposal or alcohol sales – but internet marketeers are in luck!  As of 2014, the only business license that you might need to do business as an internet marketer is the ability to act as a pass-through for sales tax collection if you sell physical goods over the internet.

Understand your Employer Responsibilities

For reasons that we will explain better in other articles, the beginning internet marketer should stay away from employing full-time (W2) employees. W2 employees require a number of concessions to federal authorities – including taxation – but 10-99 employees are temporary contractors that are hired through services like eLance or oDesk, and they don't require the employer to keep track of withholding or other taxes – just one payment for each employee.



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timcher's picture
7 yearss ago

Nice article
timcher's picture
7 yearss ago

Very nice
test's picture
7 yearss ago