Updated: Jun 21, 2022
So you want to start an eCommerce business, but don't know where to begin?
I'm glad you're here, because this article contains a checklist every new business needs, no matter what you're selling. Keep reading to find out more.
Starting an eCommerce business can be overwhelming, but with checklists to follow it'll make your life a lot easier. Here are some of the critical things you don't want to overlook when setting up your new eCommerce business:
Business Strategy workshop
Choose legal structure
Obtain a FEIN (or your country's equivalent)
Get a business bank account
Obtain any licenses and permits
Hire staff (if applicable)
Set up accounts and bookkeeping
Systemize and organize
You've come up with a product that you believe will solve problems or pain points. But you haven't done any research to prove the viability and need for your product.
Market research is the critical first step in any business plan. This is to gauge the interest and determine the need for a product, and ensures you don't waste hours of your time making the product, or thousands of dollars purchasing a product without knowing if it'll even sell.
Creating a business plan is highly recommended, even if your business is small. A business plan helps you develop goals and milestones for your business. It gives you a forecast for the future, and you're more likely to attract investors if you have a solid business plan.
There are many ways to write a business plan and many things you can include. We'll dive into business plans in a later article.
Business Strategy Workshop
You don't have to be a strategist to hold a strategy workshop. All you need is a group of people committed to the business (which is usually the founders). Then, usually using a set of prompts, run through the workshop together as a group.
A business strategy outlines the company's purpose, vision, mission, values, and competitor analysis. You can also include the target audience, branding, and more in a strategy workshop. We'll show you how to do these in a future article.
Choose Legal Structure
There are several legal structures in the US. These are:
Limited Liability (LLP)
Limited Liability Company (LLC)
Sole Proprietorship is the default for most small businesses who don't opt for a specific legal structure. However, it doesn't separate your business from your personal liability. This means you are personally liable should something go wrong.
Partnerships are when two or more people own a business together. Limited Partnerships have one partner with unlimited liability, while the other partners have limited liability. This usually means they also have limited control or say in the business.
Limited Liability Partnerships protect owners from debts against the partnership.
Limited Liability Company
A Limited Liability Company (LLC) is similar to a corporation and partnership business structure. But your personal assets are protected in most cases. An LLC also requires members to pay self-employment tax.
According to Investopedia: A corporation is a legal entity separate and distinct from its owners. Under the law, corporations possess many of the same rights and responsibilities as individuals. They can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.
A cooperative is owned and operated by "user-owners," usually consisting of a board of directors and officers. Members receive profits, purchase shares, and have equal voting rights to control operations.
Disclaimer: We aren't legal professionals, and our explanations are high-level. If you want more information on legal structures, we highly suggest you seek advice from a legal professional to find which structure best suits your needs.
Obtain an EIN (or your country's equivalent)
An Employer Identification Number (EIN) is mandatory for almost all businesses in the US, even if you don't have employees. It's an identification number for you to file your taxes. Financial institutions, credit card companies, and vendors also may require this number.
You can apply for an EIN number on the IRS website.
Get a Business Bank Account
While it isn't always mandatory to keep your business finances separate from your personal finances, it is highly recommended. Even if you're just starting out or your business is small, getting a business bank account from the beginning is better in the long run.
Not only is it more professional, but when it comes to doing your taxes, it will make your (and your accountant's) life much easier. Also, if your business funds are lumped with your personal funds, it's risky business should you, for any reason, face any legal troubles.
Obtain Any Licenses and Permits
You will need specific licenses and permits depending on what you're selling. Licenses such as a Business Operation License, a Doing Business As (DBA) License, and Seller's Permits are just a few and all standard, but not necessarily compulsory.
Ensure you do thorough research, so you know which permits are required to avoid any fines or problems in the future.
Hire Employees (if applicable)
Sometimes not having employees can be a bottleneck in our business growth. But it's not always an easy decision to hire someone. It's hard to relinquish some of that control, but putting it off for too long can have a detrimental effect on your business.
Hiring the right people at the right time is one of the most critical pieces to the success of a business.
Set Up Accounts and Bookkeeping
Another important step is to get your accounting in order early on. We recommend you find an accountant to help you with your quarterly taxes.
And there are plenty of apps out there that are designed for eCommerce brands. Apps like Xero take the stress and time out of managing your finances throughout the year and can be easily and securely shared with your accountant.
Insurance is something many overlook when starting an eCommerce business. Humans don't like to think of worst-case scenarios, but we must be prepared for anything to happen.
You need Liability Insurance at a bare minimum. And there are a bunch of other insurances you can get, depending on your business and levels of risk. Speak to a professional or do some research to find out which insurance is best for you.
Systemize and Organize
Being organized and having systems in place from the get-go will save you so much time. It's critical to have systems in place when running a business, especially if you scale quickly. There'll be no time to systemize and organize later.
Use Checklists for Everything
This is just one checklist you can use to get the basics in order when setting up your eCommerce business. Hopefully, it’s given you some helpful insights to launch your business with confidence.
If you need any help along the way, get in touch. We’re here to help.