I recently documented how I plan to build an online store during my recap of 2010 SMART Goals. My plan is to create an online store that will generate at least $500 in income per month on a recurring basis by the end of this year. This future revenue stream is probably the most dynamic and exciting of my 6 income streams that I plan to build and grow this year. It is also the income stream that I know nothing about!
The Online Store
I will provide some more details about my online store later, but in order to get it up and running, I need to officially form my business. I don’t plan to sell my own product in this online store, as that would go against the passive income model that I am looking to build. Instead, I plan to sell wholesale items, which will require a business license. Most wholesale suppliers require a copy of a business license and/or Tax ID number to open up an account and begin purchasing products.
I have always had the intentions of officially setting up my business, but kept putting it off. Creating an online store is forcing me to take action and finally take the steps to make everything official.
As I am currently stepping through the process of setting up my business, I thought I would provide some helpful tips you may want to consider for yourself. Check out my list below for more details.
4 Things to Consider When Setting Up Your Business
I am not officially through setting up my business yet. I still have a few things to complete, but am well on my way to making everything official!
Here are a few things that I needed to decide on when forming my business that you may want to consider when the time comes for you to open up shop -
- Type of Business – After reading up on different business structures like a Sole Proprietorship, Partnership, or Limited Liability Company (LLC), I have decided to go with an LLC. When it comes down to it, I want to protect my personal assets from my business, which is why I went with the LLC. Regardless your preference, you need to do some research and think about the type of business structure you would like to create before going through the process.
- Company Name – I probably shouldn’t feel this way but I have never really given a lot of thought to a company name. To me, there is just more important things to think about when starting up a business. However, having a company name is required to officially form a business. I have come up with 3 possible names to call my business and will announce the winner when everything becomes official. If you are considering creating a business, then spend a little time coming up with a few options of how you plan to name the entity.
- Business Location – As I plan to operate my LLC business in the U.S., I needed to make a decision on what state to operate in. This was actually a very big decision for me, based on the state that I reside in. Several months ago, Amazon terminated my Associates account with them based on a new tax law that was passed in my home state. Basically this means I can’t earn any affiliate income through Amazon. I strongly considered forming my business outside of my home state, so I could once again use Amazon to generate income. I ended up deciding to form my business in my home state after weighing all the options. This is something that you may want to research a little more, depending on where you want to form your business.
- Company Address – Since I decided to form my company in the state that I reside, my next decision was picking a company address. I could have made things easy and cheap and used my personal address as my business address. However, I wanted to keep my business affairs separate from my personal life and decided to get a business address. For less than $30 per month, I am opening up a business address by creating a new mailbox account through UPS. This is another question that you should ask yourself before you start the process of forming your business.
- Starting a Home Business – Setting Up the LLC
- 4 Ways to Make Money with the Things You’re Already Doing
- How to Apply Newton’s First Law of Motion to Your Business
- Green Business – A Passive Income Opportunity?
- Tips on How to Open a Small Business Checking Account
Final Thoughts
There is something about officially forming a business that is exciting to me. I have always wanted to do this, but never took any action to get things started. Now that I have a set of defined goals in place, I am forcing myself to make the move. For a few hundred dollars, I will have setup an official business entity that I can call my own. I believe that it adds some legitimacy to what I am working towards and is just another part of working towards financial independence.
Have you officially setup your own business? What type of business structure did you use?
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Another good thing about an LLC is that if you set it up as a single member LLC, the tax forms are easier to complete.
I created an LLC as well, but put my wife as a member as well in case something happens to me!
@Dusty – Thanks for the tip on the single member LLC. I ended up going with adding my wife for the same reason as you!
Ah I didn’t notice this side of your business plan before, interested to see how it goes for you. I am setting up an online store of sorts which will sell PLR articles for internet marketers to use. I’m putting a LOT of work in now, but I’m hoping eventually it will be passive.
@Ruth – I am excited about seeing your online store for the PLR articles. I hope to get things up and running sometime next month with my online store. Lots to figure out still but exciting at the same time!
Interesting post. I’ve set up several dozen companies and a variety of businesses before. I’d skip the PO Box step. It does not add any credibility as anyone looking can quickly find out it’s a UPS Store box. Just adds needless cost and hassle going to get your mail. A lot of internet businesses are home based, no one cares.
A good name however, is pretty important. You want to sound professional and have a name that is easy to spell. Fancy odd spellings are nothing but trouble I’ve learned. I would not worry A LOT about the name, but just like you want to put thought into naming your kids, you should put thought into naming companies you spawn into the world.
@Jade – Thanks for bringing me back to reality! I originally wanted to use the UPS Store mailbox more because we are getting ready to sell our home and I didn’t want to have to change it again.
I ended up using our house and will work to change it if we end up moving.