Business registration is the most crucial process in launching any startup. It’s probably the most significant legal hurdle that many aspiring entrepreneurs face. Additionally, business registration can be quite a tedious process, especially if you’re physically carrying out the entire process. Depending on your location, it could take days, even weeks, to attain full registration status.
Fortunately, the internet has made it incredibly easy to register businesses online. As long as you’re legally eligible to run a business, have the requisite documents, and can afford the registration fee, you can dispense with the whole registration process in under an hour.
This post addresses the top five things to know about registering an online business.
1. Set up a mailing address
There’s a common misconception that virtual businesses do not require a mailing address – far from it. The fact that you’re setting up an online business doesn’t exempt you from having a physical mailing address. Even if you conduct most of your transactions online, you should still maintain some form of physical address. That’s because there will always be some clients and prospects who are happier contacting you through snail mail.
Ordinarily, your business address should be part of your ‘Contact Us’ page. It’s also worth noting that you don’t need to use your home address as an official mailing address. You can easily set up your mailbox in your local UPS Store, as long as you provide them with an actual street address.
What if you find the process of setting up a mailing address long and tedious? There’s no need to worry, as there is plenty of low-cost business address service in London that can help you with the process.
2. Ensure you’re ready to take the plunge
It would be suicidal to register a business (be it an online or brick-and-mortar business) without first conducting your due diligence. Before you get to the registration process, ensure that you’ve done enough research and ascertained that launching the company is a great decision. You ought to have analyzed the business idea adequately in terms of its economic viability.
Some of the questions you must have settled with at this point include:
- What products and services are you seeking to offer?
- Have you identified reliable suppliers yet?
- What’s the nature of your competitors?
- What’s the nature of your clients?
- How many employees do you intend to engage?
- What are the expected returns on investment?
- What are your checkout, shipping, and returns policies?
- How scalable is the business? For instance, are there plans for expanding beyond the internet realms?
- What are the contingency measures?
Needless to say, you must also have already settled on a name for your business. The name should be unique enough to capture your brand’s interests while also memorable enough to linger in your clients’ minds.
3.The registration process differs by region.
The internet is often referred to as one global village. This essentially means that you can interact with users drawn from far and wide by the click of a button. However, when it comes to fragile issues like business registration, the internet ceases to be a global village, at least momentarily.
As you shall find, various countries and states impose specific guidelines to be followed when it comes to online business registration. In most cases, the registration happens through a country’s Ministry of Trade or its equivalence, such as the Ministry of Industrialization.
Also, there may be additional considerations, depending on the nature of your business. For instance, most countries place a higher premium on sectors like finance, security, and health. If the company you intend to register online falls within any of these sectors, you may be required to be present in-person to complete the registration process.
4. The nature of your business determines your registration fees and tax obligations.
Like brick-and-mortar counterparts, online businesses fall within specific categories, depending on their structure and ownership. It’s important to note that your business is significantly structured, influencing your registration fees and tax obligations.
The following is a breakdown of how it works:
- Sole proprietorship
A sole proprietorship is a business owned by a single person (known as the sole proprietor). Most online companies fall within this category. A sole proprietor faces fewer legal challenges when registering their online business. But depending on your location, you may still be required to have permits and licenses. These documents are usually available at your local Small Business Administration (SBA) offices.
Sole proprietorships typically pay around $50 to get their businesses registered online.
- Partnership
A partnership is a business owned by at least two people who share financial and operational responsibilities. Registering a partnership online requires all partners to generate and sign a partnership deed.
- Limited Partnership
A limited partnership is a form of partnership where General Partners involve themselves in the business’s daily operations, whereas Limited Partners mostly invest in the company. Limited partnerships are costlier to register online than sole proprietorships and partnerships.
- Limited Liability Company (LLC)
Limited liability companies combine a partnership and a corporation. Some online retailers prefer LLCs because this business model involves less regulation and limited personal assets at risk.
- Corporation
This is a fully independent company with shareholders. Online corporations are less common compared to the above-highlighted business models. Corporations also tend to bear more solemn tax obligations.
- Nonprofit Corporation
As the name implies, these are corporations established for charitable purposes. Nonprofit corporations are the only businesses that can apply for tax-exemption.
- Cooperative
A cooperative is owned and operated to benefit public members that mostly use its services.
Cooperatives have no stakeholders, and as corporations, they are rare among online merchants.
8. You’ll need a business license.
Although we’ve already mentioned it, it warrants repeating that the process of registering an online business includes applying for a business license. It may be tempting to ignore this essential requirement. But you’ll never escape the long arm of the law forever.
A business license is a direct proof that your business is a legal entity. Generally, the fee charged for the license depends on the nature of your business. The good news about a virtual business license is that you only need to apply for it based on your location and not necessarily the entire geographical area that your company services.
In addition to a business license, you may also require a home occupation permit, an occupational license, a seller’s permit, and a sales tax license.
Conclusion
The process of registering an online business is just as intricate as that of registering a physical company. If you don’t have the time to go through this rigorous process, you may consider hiring a business registration lawyer.