Six steps for starting an online business in 2021

Gregory A. Schrage

Author: Gregory A. Schrage

POST DATE: 11.20.20
Ccha  Business Services

If you’re ready to start a new business, CCHA is here to help you get on the fast track to success, with six steps for starting an online business in 2021. While there’s plenty to do before you’re up and running, these six steps will help set you up and get you started out on a strong legal footing.

Ccha november 2020 Five steps for starting an online business in 2021 blog image 1

1. Select the business structure that best aligns with your goals

CCHA previously discussed the benefits of creating an LLC, the pros and cons to Starting a Sole Proprietorship, four reasons why to start a business by the end of the year, and other startup 101 tips, but before you get too deep in the planning process, you’ll want to decide on your business structure. Where online businesses are concerned, one formation is most common: the LLC. The reason for that? This business structure protects your personal assets from company troubles that may arise without over-complicating your tax status. Despite its popularity, an LLC isn’t for everyone and it’s always best to speak with an attorney during the initial planning of your business ventures, to best avoid any complications.

2. Name your online business

When it comes to naming your business, the last thing you generally think of is whether or not it could get you into legal trouble, but that should certainly be top of mind for any entrepreneur.

If you plan to form a corporation or LLC, your state’s laws will restrict you from using a name that another business entity in your state is already using. In some states, you also can’t use a name that is deceptively or confusingly similar to another business’ name. In Indiana, the law requires that the name of a corporation, LLC, LP and LLP be distinguishable from the name of any other business of any other type, already on record with the Secretary of State’s office. For more specifics on Indiana business names, visit the INBiz Portal.

3. Obtain an EIN

Registering for an EIN - or Employer Identification Number - is comparable to securing a social security number, only for your business. When you’re ready to apply, you’ll be asked for the date of business formation and for the business's legal name, so have those tasks (step 1 + 2 above) marked off your list before this step.

The Internal Revenue Service (IRS) has some basic criteria to determine what businesses need an EIN. Here are some general aspects where an EIN is necessary:

  • Is the business a multi-member LLC?
  • Is the business a partnership, nonprofit, or a corporation?
  • Does your new business have employees?

If you answered yes to any of these questions, obtaining an EIN will be necessary. Even if your business does not meet the criteria above, it is generally recommended that taxpayers secure an EIN for the business to open a business bank account (outlined below), build business credit, and lower the risk of individual identity theft.

4. Set Up a Separate Business Checking Account

When starting a business, CCHA recommends opening a business checking account and a small business credit card account, to strategically separate your personal finances from your company finances. While it may seem like an unnecessary step, it can make it easier to track your income and expenses, especially when tax time rolls around. Having business finances separate from personal finances will allow you to have an idea of exactly how much money your business has, thus helping you create an accurate small business budget and more accurate project cash flow. Having a business bank account also helps a business owner deposit payments, plan a budget, manage any payroll, receive payments and generate financial reports more easily.

5. Consider applying for trademarks, patents and/or copyrights

Intellectual property is defined by Merriam Webster as "property (such as an idea, invention, or process) that derives from the work of the mind or intellect." CoFounder Magazine defines intellectual property as “your brand identity, ethos, the colors you use, the slogan, and logo. It also refers to the products you sell or the service you provide, but specifically the part that makes it distinctive to your company,” a definition that perfectly captures the scope of these important aspects of your business. Three common ways to protect these assets: trademarks, copyrights and patents. CCHA strongly recommends that new business owners take time to evaluate the protection of a company’s intellectual property (IP) rights and assets. While there are a whole host of specific issues and rights related to a company’s IP rights and different ways to protect them, new businesses generally need to consider patents, trademarks, tradenames and copyrights as potentially protectable intellectual property.

6. Secure online domain and social media handles that match or compliment your business name

You have your name secured, but any successful e-commerce business also needs a strong, strategic online presence. A custom website domain that features your exact business name or helps an online user remember your business name and value proposition (ie: adding the words “shop” or “buy” before your business name in your URL) is the easiest way to generate direct traffic and help grow brand awareness. The same can be said for social media handles - that is, the name assigned to your accounts on sites like Facebook, Instagram, LinkedIn, etc. Those handles (the @yourbusinessnamehere) help ensure your customers and prospective customers have a direct line of communication with you, and also give you a way to generate real-time engagement with the people that most impact your bottom line.

There are several tools that can help you research your domain name and social media handle availability, or you can simply perform individual searches on any of the social media sites you are considering and see what results show, to determine whether you add the same words (ie: shop, buy) referenced above. Especially where social media handles are concerned, adding a word in front of or after your business name can really help establish the brand in the minds of your potential customers.

Whether starting a new business or investigating what business formation strategy best suits your particular business needs, CCHA can help guide you through those decisions and discuss the benefits and issues related to incorporating or otherwise properly organizing your business entity. If you need assistance in properly maintaining your business entity, or if your business entity has been administratively dissolved and you need assistance regarding reinstatement, we can provide detailed guidance regarding maintenance obligations and reinstatement options. Our firm’s business lawyers have the skill and experience to help you solve any business problem or challenge.

For more information or for assistance in developing a strategy for your startup or existing business, or to discuss other issues related to your business operations, please contact us.