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  • Kaprice Dal Cerro

3 Steps New Business Owners Do Before Starting a Business Online

Updated: Jan 14


Photo by Alexander Suhorucov

You feel it's time to start a business.


You're excited and ready to take the leap and join the online business world.


You feel in your gut that there is more for you than working a traditional corporate job.


Ideas are constantly spinning in your mind and feel like a hurricane waking you up in the middle of the night.


You read about other people taking the leap and starting businesses online, and you wonder if you can do it too.


You've researched and validated the need for your product(s) or service(s).


You're ready to turn your ideas into a real business.


But then you find yourself pressing the brake and coming to a complete stop.


What’s holding you back?


Is it that you have no idea where to start?


You keep researching, but the information you find is not what you need.


You want to know the nuts of bolts of starting a business. How do you form a legitimate business entity?


In today’s fast-paced world, information about how to start a business the right way is often overlooked, and many “business” owners are not running a business that would be recognized by legal standards.


The difference between running a “business” and running a legitimate business is taking the necessary steps to register your business and making it a legally recognized entity.


The following three steps will help get you started to form a legitimate business. A business entity that keeps you and your personal assets secure.


Let's get started.


It's time to take your foot off the brake and start a business.

1. Build Your Business Structure

Photo by Zen Chung


What does "business structure" mean when starting a business?


Your business structure, or as I often refer to it, is your business foundation.


Think of it as if you are building a house. You can't build the walls until you have a solid foundation. It's the starting point of registering your business as a legitimate entity.


To build your business structure, start with the following steps:

  1. Research your business name availability: Do a Google search for the name(s) you have selected for your business. Did you find any similar business names? Additionally, you should confirm that your business name is available with your local Secretary of State. If you find a business name similar to yours, you may want to consider a different name. You may run into trademark or branding issues down the road with a similar name.

  2. Domain name search: Do a general Google search for your domain name(s). Domain names may not be in use and come up in your Google search, so you will also want to check domain providers like GoDaddy.com or Namecheap.com to see if the domain name(s) are available to purchase.

  3. Do a trademark search: Generally, you do not trademark your business at this stage, but you want to do a search confirming if your business name and product names are currently trademarked. This helps you in the future, so you do not have to worry about rebranding your business and products.

  4. Research business application costs and the filing process in your state: It's important that you become familiar with the application process. Each state has different registration and fee requirements. This information can generally be found through your local Secretary of State. You can also check out SBA.Gov to get you to the right location for your state.

  5. Research and understand the different business entity options: This is very important. How will you register your business entity; as an LLC (Limited Liability Corporation), Sole Proprietorship, Partnership, or S-Corporation? To learn more about each business entity option, visit SBA.Gov. It's essential that you become familiar and well-versed with each of the different options. Before registering, you will also want to consult with a business attorney and CPA to determine what makes the most sense for you and your business.

2. Register Your Business


You've done your homework; now it's time to take action and create a legitimate business.

  1. Apply for your business license through your local secretary of state. Complete the application and pay the application fee (if needed). Depending on your state, you may receive immediate approval after you submit your application, or you may have to wait for a response via email or mail.

  2. Apply for a federal tax identification number: The federal tax id number is called an EIN (Employer Identification Number). This is like a social security number for your business. Currently, there is no charge for the EIN number.

  3. Apply for a state tax identification number: A state tax identification number is needed for selling products that your state collects tax on or if you have employees. Each state has different tax laws, so consult with a local CPA, familiarize yourself with your state's tax laws, and meet the necessary requirements.

  4. Purchase your domain name: Secure your domain name(s). These are relatively inexpensive, so if you have variations of your business name or other names you may use in the future, I recommend securing those domain names.

  5. Research and open a business bank account*: For many reasons, you must keep your business and personal bank accounts separate. Keeping your personal and business bank accounts separate help to protect your personal assets and to keep track of your business income and expenses in one place. When researching business bank accounts, look for banks that offer no balance minimums and don't charge fees for basic services, such as balance minimums or fund transfers. Ask other small business owners who their favorite bank is. This is a great way to learn how specific banks work with small business owners. *To open a business bank account, you must have your EIN number.

  6. Apply for a business credit card: This is similar to having separate bank accounts. Keeping your business expenses separate from your personal credit card keeps your business records easier to manage.

  7. Setup payment portal(s): Research the different payment processors, such as PayPal, Stripe, Square, etc., and see which ones are a good fit for your business transactions. You will need your EIN number to open a business account.

  8. Set up a platform to sell your services and products: How will your customers be able to view and purchase your products/services? There are many different platforms to consider, such as DIY websites or course platforms.

3. Protecting Your Online Business - Legal and Insurance Needs

Photo by Alexander Suhorucov


Many new small business owners overlook or look the other way when it comes to having business insurance, client contracts, or even terms and policies for their websites because of the cost associated with them.

These are the most important things for your business and not the place to take shortcuts.

It's best to be proactive instead of reactive.

You need to treat your business like a business. Not like the lemonade stand you had outside your home as a kid. Investing in your business's safety is a small price compared to what you could lose if you do not set up proper policies for its protection.

  1. Consult with a business attorney: Yes, there are differences in what attorneys specialize in. Your attorney must be versed in your type of business to help you get the proper documents in place. Your attorney will confirm what type of contracts you need, what information you need on your website, and the necessary forms or contracts for your business and for any employees, vendors, independent contractors, etc.

  2. Consult with an insurance broker: This is another must-have for your business. What type of business and liability insurance would be best suited for your business? Even if you feel your business is not making enough revenue to validate the cost, it is a necessary part of your business foundation. You would be surprised what a good business insurance policy can protect you and your business from.

  3. File a Trademark: You may or may not be ready to file a trademark. However, working with a Trademark Attorney is important before filing a trademark by yourself. You may spend a lot of time and money and not file the proper paperwork. A Trademark Attorney will also advise you when would be the right time to file for your business needs.

Now It's Your Turn; Get Started Today With Your New Online Business

Now you have the inside scoop on how to start a business online legitimately.


Are you ready to plan your grand opening?