How to Set Up an Online Business

How-to-Set-Up-an-Online-BusinessIt should be remembered that setting up in online business is just like setting up in any other business, before you start trading, before you start spending or making money, you need to set up the necessary business structure, a bank account, book keeping, premises, getting credit card merchant status, finding professional advisers, and of course registering with the appropriate tax authorities.
Whether you are running an existing business or not, it is a good idea to set up a proposed online operation as a separate entity, with its own accounts, its own bank account, and its own share of fixed overheads. This is necessary because there are a lot of differences between an online operation and a conventional one, and separating them helps one keep track of their relative performances. It should be noted that most large companies have found it necessary to take this approach.

As far as an online business is concerned it matters little whether it is operated as a sole trader business, as a partnership, or as a limited company, the choice depends on you and upon the advice given by your accountant. What does matter is the structure of the business, will it have its own employees and its own premises, or will it be a virtual business, existing solely in cyberspace, and subcontracting everything via Internet communications links. If you are already in business, then your existing company could subcontract services to your new online company.

Using the virtual company model has considerable advantages, it requires very little initial capital investment, and dispenses with a great many overhead costs including the need for premises. Virtual companies are also easily scaleable, if the business expands rapidly, or the type of business changes, it is far easier to bolt on additional subcontractors than to develop the requirements internally. However, it is advisable to discuss the implications of operating such a business with your accountant before starting down this route.

Finding a good Internet knowledgeable accountant is very important, and if you are planning to do a lot of trading overseas your accountant should have access to expertise in this area. Similarly it may well prove worth while to find a lawyer who both knows about the Internet and about international law with respect to the Internet.

Whether you will need to find outside sources of finance for your online business will largely depend upon your own financial circumstances and upon the nature of the business. By and large if you plan carefully, and do not waste money on unnecessary promotion, it is possible to set up an Internet based business for much less than the comparable traditional business.

However, as with accountants and lawyers it is important to find a good Internet savvy bank, with, even more importantly, an Internet savvy bank manager. Trying to deal with a bank which has no idea of what an Internet business requires can be an extremely frustrating exercise. particularly since you will need to have the help of both your bank and your accountant when trying to arrange facilities for payment by credit card.

Arranging for credit card facilities can be the most frustrating part of setting up anĀ online business operation. Traditionally credit card companies require two years audited accounts before they will give someone merchant status. Today, merchant providers, will for a percentage fee, give an online trader a facility to take credit cards with far less rigorous scrutiny of accounts. But be prepared for problems in this area.

Finally you will need to set up accounting and management systems for your online business. As far as accountancy is concerned then virtually any computerised accountancy package will do. But you will also need to set up some form of computerised system to monitor your site and various sources of income. It is no good thinking that if you display a product on a web site that you will sell any, people might not go to that page, or the sales blurb may not grab their attention. These are factors that you need to know for successful and profitable e-commerce, and can only be seen if you carefully use and analyse site traffic statistics.

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