Of one of the many decisions that you will be required to make when starting an online business is probably decide on what type of legal structure your company will follow.
This decision will not only have an impact on the amount you pay on taxes annually but will impact on the paperwork that you will be handling on a frequent basis, as well as personal liability and ability to raise capital.
What type of business structure should you choose?
This depends on several factors that encompass financial status of the owner and future business plans regarding growth and expansion. Essentially, there are five different types of structures that are recognized: partnerships, LLC or limited liability company, corporations, S corporations, and sole proprietorships. You can apply for your state and federal filings online at Filing.Solutions
The type of business model chosen by the owner depends on how much income the business generates and what kind of product or service that it sells. In the modern online business world, entrepreneurs face a lot of confusion on what business model to choose because traditionally there are three types of business models- Traditional, modern business model, and a mix between the two.
Benefits of starting an online business
Everybody knows that businesses have potential to earn unlimited income; same goes for online businesses if done correctly. Some of the benefits you get are:
- Chance to earn enormous amounts of money
- Freedom to travel and live anywhere because of web based conducts
- Absentee ownership
- You are in control of your income and time
- Work from home easily
- Endless scope for growth and expansion
Steps to create an online business
- Develop a business plan: It is essential that you first write a business plan that serves as a guide on how to start and conduct your business efficiently.
- Get business training and assistance: You can choose to go for a paid course or take advantage of many counseling services and training programs available. They will teach you how to prepare an efficient business plan, secure financing, and many other details.
- Choose a location: No business is complete without a physical address. Choose a customer-friendly location and make sure you regulate with local zone laws.
- Financing your business: You cannot start or grow your business without having the necessary finance to do so. Go for government loans, research grants and venture capital to make a start.
- Determining the legal structure: Which form of business is most beneficial for you: sole proprietorship, LLC, partnership, etc.
- Register the business: Register the name of your business with the government and learn about taxation policies and what other documents you need to obtain to avoid any legal actions later on.
- Get licenses and permits: This can be a tedious task, but it is important nonetheless because licenses will grant you the permits required to carry out many affairs.
Difficulties faced by new online businesses
The idea of you being your own boss is attractive indeed, but to reach that status you must overcome various hurdles. Some of the difficulties that you must take care of while starting your online business are the following:
URL: Before you give your business and online presence, you need to register the URL. Check and double check if the URL is being used by someone else and then only proceed to develop your website.
Own your website: This means you must have complete control over your website and have the ability to take actions as you see fit. Many unethical web developers retain control of the sites created by them even after they have been paid in full. Make sure that this does not happen with you.
Managing employees: Managing employees is not an easy task, especially when you have to do everything online. Use an Internet use policy to delegate authority and responsibility to employees. Some important terms that should be covered in this document include monitoring and penalties, and prohibited use of Internet.
Even after you have established a business structure and got it up and running, remember that changing circumstances that make one type of organization favorable from another. So it is a wise decision to reassess the type of business model frequently to make sure you have the type that gives you maximum advantages.