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37 Replies Last post: Dec 15, 2008 6:07 PM by DSTREET1

Starting my first business

Nov 6, 2007 10:16 AM

noleafclover6 14 posts since
Nov 6, 2007

Hello all!

I have a few questions about moving forward with a business that I have been planning for a few months.
Needless to say, I am both excited and nervous, but I am determined to get started! My name is Matt, and I studied business marketing and IT at college. My father has worked in restaurant supply all his life, and we had always talked about someday starting a business of our own. After graduation and some planning, I decided to move forward with an online business (to start!)

Some background:
This is an internet business - my website will sell professional knives and cutlery and will utilize a payment processing service, which I still have to choose. I have investigated a few types of these, Authorize.net and Paypal being the ones that stand out the most.

My biggest questions regard actually registering the business and incorporating, if need be. Since this business is starting out from my home, and I won't have any employees to start with, what do you think the best way to go about registering the business is, and choosing a structure? Essentially, I want to make sure that I avoid any issues with taxation and protect myself from liability.

Does anyone have any experience with different payment processing services? Which ones do you like best / most?

Any additional advice for me would be great as this is the first time I have moved foward with something like this. Thanks for reading!

--Matt

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Ed O'Gee 215 posts since
Oct 25, 2007

1. Re: Starting my first business Nov 6, 2007 10:26 AM

Hey Matt - Welcome to the community

1. Congrats on starting your first business you should be excited and nervous but it sounds like your dad has prepared you well

2. If you are going to incorporate right away I'd say look at an LLC - the advantages are if someone sues you they can only come after the business just like any other corporation, so your personal assets are safe. From a tax standpoint you'll file just one return. All you'd do on your personal return is claim your businesses loss or profit so an LLC makes tax time easier

3. As far as payment options, PayPal is definitely the most recognized but if I were you I'd start with the bank that holds my business checking account. Usually you get paid faster if the entity that processes your card transactions, also is the place where your money is deposited.

Good luck!!

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LUCKIEST 7,912 posts since
Aug 6, 2007

2. Re: Starting my first business Nov 6, 2007 10:30 AM

Matt, This is a great start. You should be both excited and nervous.
I am a SCORE counselor, both on line and in person. We always suggest you Develop both a Business and
Marketing Plan. You can get great info by visiting "www.score.org" and it is FREE.
Do you have a Business Name?? You should register the name with the I R S. (You can register on line at "IRS.gov")
Every business should have an Accountant, a Lawyer and an Insurance Agent.
I have used Paypal with NO problems.
Good luck, LUCKIEST

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Biz Online 71 posts since
Oct 10, 2007

3. Re: Starting my first business Nov 6, 2007 10:32 AM

Congrats, Matt, on taking the plunge!
As far as registering your business, talk to a business attorney. The main two options to protect yourself is either an LLC or C-Corp, but taxation is different for both, so ask a lot of questions. I did an LLC. Once I got my first employee, I then set up and got EIN, or employer identification number (required by the IRS if you have employees.)

As far as payment processing, PayPal will get you started and they only charge a fee for each transaction. Authorize.net is usually a bit more expensive on a monthly basis, so you may want to check with your bank first. There are hundreds of merchant account service operators. Try finding one without a big monthly minimum.

Have you done your keyword research for your new website? Determine before you build a single web page your target keywords. Then, and old search engine optimization (SEO) idea is to name the page with those keywords (put a dash - between each word in the page name, not a space!) For instance:

Example of new page names:
butcher-knives.htm
professional-knife-sets.htm
cutlery-set.htm
kitchen-cutlery.htm
custom-knives.htm

And if you plan on doing pay per click advertising, don't forget possible negative keywords:
-hunting knives
-case knives
-pocket knives
-buck knives
-folding knives
-throwing knives

Good luck with your business venture!
Cliff

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noleafclover6 14 posts since
Nov 6, 2007

4. Re: Starting my first business Nov 6, 2007 11:16 AM

Thank you all for your informative and helpful responses.

I heard on the radio about www.legalzoom.com and they offer document preparation services and legal help with setting up an LLC or similar companies. Does anyone here have expreience with them or similar online service providers of this type? My head is spinning with all of the options I seem to have.

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Ed O'Gee 215 posts since
Oct 25, 2007

5. Re: Starting my first business Nov 6, 2007 11:22 AM

in response to: noleafclover6

Legal zoom is great I use them for most everything legal.

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Lighthouse24 2,396 posts since
Oct 10, 2007

6. Re: Starting my first business Nov 6, 2007 12:23 PM

My suggestion is to start with a set-up that's easy, fast, and inexpensive -- because none of your initial decisions has to be forever.

Will you and your father be true partners in running the business? If so, an LLC is probably the way to go. But if it's really just YOUR business at this point, you could begin as a sole proprietor, and after a trip to county clerk and the bank, be legally up and running today. Taxes are simple, and although you'd have unlimited liability, that can actually help you get more money to build the business in the beginning (because it isn't just the new business entity that's liable to creditors, it's you personally). People often read "liability" and worry about lawsuits, but being sued is not really a concern until you sell things and accumulate enough assets to make a lawsuit worthwhile. When you reach that stage, you can incorporate -- and there some very advantageous ways to do that and bring your father or other family members into the business at that time.

As for merchant services, I'd begin with PayPal -- again, simply because you could be set-up and accepting credit cards 30 minutes after you registered the business and opened a bank account. Once you're making a profit, you can investigate other options and change your provider. In fact, your history of credit card revenues will help you get more favorable rates in a year or two that you would be offered as a new business today. PayPal's service is very easy to use, and most on-line shoppers recognize it. Keep in mind that unlike your business bank account balance, your PayPal balance is not federally insured -- so make regular transfers to keep the PayPal balance relatively low.

Hope this helps. Good luck with your new enterprise!

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noleafclover6 14 posts since
Nov 6, 2007

7. Re: Starting my first business Nov 6, 2007 12:36 PM

in response to: Lighthouse24

Thanks so much !

One additional question I ahve after reading your post - do I have to set up my LLC / business structure right away before I begin selling online? I realize tha the setup of the bank account and registering with paypal is relatively easy and quick, but I believe Bank of America wants you to be registered before they open your business account. Thoughts on this?

Thanks again
--Matt

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Lighthouse24 2,396 posts since
Oct 10, 2007

8. Re: Starting my first business Nov 6, 2007 12:53 PM

in response to: noleafclover6

Yes, you need to "give birth" to the business first -- making it a legal entity. Your DBA or articles of incorporation will be like the "birth certificate" and the EID (Employer Identification Number -- available on-line from the IRS) will be the business' "social security number." You need those to open a bank account in the business' name.

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NatOnline 670 posts since
Oct 10, 2007

9. Re: Starting my first business Nov 6, 2007 1:24 PM

Congratulations on your new online business project.

I suggest like Lighthouse24 said by using first Paypal only, then check how your customers pay. If the majority pay with credit cards and you make enough sales to pay a gateway provider like authorize.net and a merchant account, then do it. Some people prefer not to use paypal for payments. This is why I give the customers both option.

Good luck

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Ed O'Gee 215 posts since
Oct 25, 2007

10. Re: Starting my first business Nov 6, 2007 1:30 PM

in response to: noleafclover6

Matt - if it will just be you owning the business, the you can set it up as a sole prop and use your social to open your business checking account. Although I'd start with the LLC because I think it is better to have a true corporate structure. I think legal zoom does incorporations for like 150, you'll get an EIN, articles of incorporation, all the things bofa or any bank will need to get your business checking account open.

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Lighthouse24 2,396 posts since
Oct 10, 2007

11. Re: Starting my first business Nov 6, 2007 1:54 PM

Ed is correct, you CAN use your social, but then that's the number your state sales tax account and use permit would have to be set up under (and some states/counties/cities disallow that), plus you'd have to provide your social to other business entities (for example, suppliers with whom you want to establish payment terms or discounts). It's fast and easy to get an EID on-line, and it lets you keep you business and personal entities legally separate from the very start.

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LT Lawn Care 36 posts since
Oct 4, 2007

12. Re: Starting my first business Nov 7, 2007 7:23 AM

Matt,

Welcome to the board - I won't reiterate all the great advice you've received on the board so far but I just want to say that I am with Ed. I think it is important that you incorporate right away. It will just make things easier. I will say you don't need a lawyer to do it. You can go to your state office to file articles of incorporation and you can go online to get your EIN from the IRS.

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noleafclover6 14 posts since
Nov 6, 2007

13. Re: Starting my first business Nov 7, 2007 11:01 AM

Thanks for all the great info everyone. This place is truly a great resource!

One additional question - when setting up a Bank of America business bank account, what do I need to know about savings / checking? Do I need both? Benefits of either?

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NatOnline 670 posts since
Oct 10, 2007

14. Re: Starting my first business Nov 7, 2007 11:39 AM

in response to: noleafclover6

If you are planning to take a merchant account, business account, credit card, etc... from the Bank of America, they've got a great pack deal. The name is "Business Advantage" it's a prenium account.

Hope you will find this useful.

Good luck

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