There is nothing more pleasing than to start a business from scratch and watching it grow. The eCommerce industry is literally exploding these days and according to experts, it will surpass $2 trillion in sales in the next few years. Like any other business, starting an eCommerce business takes time, energy, and effort. It’s more than just choosing a brand, a list of products, and selling them online. There are some rules and regulations you need to know before starting an eCommerce business to protect yourself legally. To help, we’ve compiled this guide about how to setup the legal structure of your eCommerce business. Let’s dig in! PS. If your goal is to build an asset that will bring true value to the market, you need to have a long-term vision and do things by the book.

Find your Niche

The first thing you need to do is research to find your niche. A niche is a defined group of targeted customers who are willing to buy your very specific products. Investigate the eCommerce area you are interested in and decide what your eCommerce business will be doing exactly. Perform competitor research to find a space in the eCommerce market to establish your brand.

Choose a Business Name and Legal structure

Once you’re done establishing a niche, it’s time to choose a name that clearly indicates what your business is. Consult the local secretary of state’s website as well as the U.S Patent and Trademark Office to make sure your business name is not already taken by another company. Consult a legal professional before choosing a business structure or entity type as it will have some significant implications for your eCommerce business, both financially and legally. If you choose sole proprietorship or general partnership you don’t have to register your business.

Apply for an Employer Identification Number (EIN)

Next, apply for an EIN for your eCommerce business which is a unique nine-digit number to help separate your personal and business finances. An Employer Identification Number is essential to open a business account and file your business taxes and other paperwork. You can easily apply for an EIN from IRS online, by mail, or through the phone.

Get a License and Business Permit

The majority of eCommerce businesses are home-based which means you likely don’t need a license or a business permit to run it. You’ll only need to apply for a business license or permit if you want to operate under a specific business name. Check with your country, and state to determine the specific requirements in your area, what kind of licenses you’ll need, and get those approved.

PCI Compliance

Ecommerce businesses are the main target for data theft, which is why PCI compliance is necessary for all online sellers to make sure their customers are transacting securely. Being PCI compliant means you’re not allowed to store any purchasing information of customers and provide a secure, encrypted checkout experience

Business Insurance

Business insurance is really important for companies that manufacture, distribute, wholesale and retail products that may be liable for their safety. There are many kinds of small business insurances, including home-based insurance, product liability, general liability, professional liability, and commercial liability. Consult your local insurance provider to find out what type of insurance you should choose for your business.

Select eCommerce Platform

Selecting an eCommerce platform to set up your online store is the most significant decision you’ll make as it will be the base to create your online store that will represent your brand. An eCommerce platform is integral for your business success as it allows you to launch your store, customize it, add your domain name, take orders, receive payment, manage inventory, and much more. It is a place where your customers will browse and purchase your products so, choose wisely.

Develop or Source Your Products

Now you’ll need to develop or source the products you’re going to sell. You can either make them yourself or can source them from distributors. If you’re selling some kind of service, list and describe the service on your website. Take your time to list the inventory on your store if you’re selling products. Plan everything from when a customer buys a product to how and when they’ll receive it.

Market your Business

Congrats! you’ve successfully set up your eCommerce store. Now that your website is up and running, you’ll need to market your eCommerce business to reach customers and drive traffic to your website. There are a variety of marketing strategies you use like Google ads, word of mouth, social media ads, etc. If you are investing money in marketing, keep track of which marketing strategies are boosting traffic, and work best for you. If any tactic isn’t working you can change or adjust it.

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