How to create a company online

How to create a company online

Choose a Business Structure

One of the first steps when starting a company online is determining what business structure to form it under. There are several options to consider, each with their own pros and cons.

Sole Proprietorship

A sole proprietorship is when an individual starts and owns a business by themselves. It’s the simplest business structure with little paperwork needed to form. The business owner has complete control and retains all profits. However, they also have unlimited personal liability for any debts or lawsuits against the business. This makes it a risky choice if the business has significant liabilities.

Partnership

A partnership is formed when two or more people start and co-own a business together. There are general partnerships where all owners share responsibilities, or limited partnerships where some owners are passive investors. Partnerships require more paperwork like a partnership agreement outlining owners’ rights and responsibilities. Profits pass directly to owners who also have unlimited personal liability.

Limited Liability Company (LLC)

LLCs combine aspects of partnerships and corporations for personal liability protection with pass-through taxation. Creating an LLC involves filing articles of organization and an operating agreement between members. Profits pass to members who have limited liability for business debts and lawsuits. However, complex rules determine how LLCs are taxed. An LLC can elect to be taxed as a sole proprietorship, partnership, S corporation or C corporation.

Corporation

A corporation is the most complex business structure to create, requiring articles of incorporation and corporate bylaws. Shareholders own the company but have limited liability. Corporations can sell stock and have continuity beyond original owners. They are taxed separately from owners and face double taxation on profits. Overall corporations offer the strongest protection but require more legal formalities and expenses.

Select a Business Name

Choosing the right business name is an important first step when starting a company online. The name you select will represent your brand and make a first impression on potential customers.

When brainstorming names, aim for something memorable, descriptive, and catchy. You’ll also want to check that your preferred name is available for use and registration.

Check Name Availability

Search online databases to see if the exact name you want is already taken. Perform a domain search to check availability as a web address. Also search state registries to confirm no other business is registered under that name.

Available names still must pass a trademark search. Even if a name isn’t in use, it could be trademarked by someone else for similar goods or services.

Trademark Search

Use the USPTO’s free TESS database to search registered trademarks. Search for your proposed name and closely similar variations. Look through results for any conflicting trademarks in your industry.

If your name is too similar to an existing trademark, you’ll need to pivot to a new name. Slight variations like adding a location or descriptor may suffice. Seeking legal counsel can also help assess risks of trademark infringement.

Selecting an available, non-infringing name establishes your business identity in a way that can be registered and legally protected. With some diligent research upfront, you can choose a name that uniquely represents your brand in the market.

Register your business

One of the first steps when starting a business online is properly registering it. This helps establish your business as a legal entity and allows you to start operating legally.

To register your business, you’ll need to:

• Get an Employer Identification Number (EIN): This is essentially your business’s social security number used for tax purposes. You can easily apply for one online through the IRS.
• Apply for a business license: Most states and local municipalities require businesses to get a general business license. Requirements vary, so check the rules for your state and city. Often you can apply online through their website.
• Obtain permits: Depending on your business activities, you may need specific permits and licenses. For example, if selling products, you may need a sales tax permit. If serving food, you’ll need permits from the health department. Research the requirements for your type of business.

Properly registering your business makes you legit in the eyes of the government and allows you to legally operate. Don’t skip this step when starting your online business! Taking the time to get registered will pay off down the road.

Set up business bank accounts

Opening the right business bank accounts is an important step when starting a company online. You’ll want to set up accounts not just for checking and savings, but also business credit cards.

Business checking account

A business checking account allows you to keep your company finances separate from your personal finances. Choose a bank that offers features like online banking, mobile deposits, and integration with accounting software. Look for a checking account with no monthly fees if you maintain a minimum balance.

When opening a business checking account, you’ll need to provide business documents like your EIN and certificate of formation. Be prepared to provide personal information as well for the business owners.

Business savings account

A savings account is useful for parking cash you don’t need immediate access to. Look for competitive interest rates so your money can grow. Some banks offer higher initial deposits, minimum balances, and interest rates for business savings compared to personal accounts.

Use your business savings to build an emergency fund, save for equipment purchases, or accumulate funds for taxes and other expenses. Automate transfers from checking so you consistently build your savings.

Business credit card

A credit card specifically for your business makes it easy to keep personal and company spending separate. Business credit cards often come with higher limits, rewards tailored to business spending, and reporting features.

Cards that earn rewards like cashback, points, or miles can help you save money on travel, office supplies, advertising, and other expenses. Pay off the balance each month to avoid interest charges.

Setting up the right business bank accounts early on lays a solid financial foundation for your new online company. Take time to shop around and find the checking, savings, and credit accounts that best fit your needs.

Build a Website

A website is the digital face of your business and a crucial part of establishing your online presence. There are several key steps to building a professional website for your new company:

Choose a Domain Name

Your domain name is your web address that identifies your business online. Choose a domain name that is short, easy to remember, and directly relates to your business or brand name. Make sure the .com version is available. Using website builders like Wix often provide free domain name registration.

Get Web Hosting

Web hosting provides the storage space for your website files on a web server and the bandwidth to deliver pages to visitors. Shared hosting plans are affordable options for small businesses starting out. Look for plans with unlimited bandwidth, SSD storage, free SSL certificates, and easy content management like WordPress or Wix.

Design Your Website

A professional design establishes credibility and trust with visitors. Simple, clean layouts work well, along with ample white space, quality photos, and branded colors/logos. Ensure your website is mobile-friendly and responsive. Focus on creating an intuitive navigation menu and site structure. Build wireframes first to map out pages and content flow.

Create Compelling Content

Well-written, relevant content that engages visitors is key. Construct a blog, add pages like About Us and Contact, create visual content and infographics, and optimize with targeted keywords. Update your content regularly to provide fresh value for returning visitors. Remember conversion-focused copywriting that persuades visitors to take action.

With the right preparation, you can build an effective website to establish your online presence and start attracting customers. Invest time planning the structure, design, content, and technical elements.

Leverage Online Tools

Creating a company online opens up a world of web-based tools that can streamline operations, improve collaboration, and boost productivity. Here are some of the key online tools to leverage:

Email

• Set up a professional branded email address through Gmail or Outlook using your domain name. This presents a unified company image.
• Use email marketing services like MailChimp, Constant Contact or AWeber to create email newsletters, promotions and automate messages.
• Install a spam filter to prevent important emails from being blocked.

Cloud Storage

• Services like Dropbox, Google Drive and Microsoft OneDrive allow you to store files securely online and enable remote access and file sharing.
• Cloud storage facilitates collaboration by allowing employees in different locations to access the same files and work together.

Project Management

• Applications like Asana, Trello and Basecamp help manage projects and tasks online across dispersed teams.
• Features like task lists, calendars, file sharing and messaging streamline workflows.
• Real-time updates on project status keep everyone on the same page.

Leveraging the right online tools is critical for managing key business functions remotely and enabling collaboration across locations. With some research, testing and training, these tools can significantly enhance productivity for a distributed workforce.

Market your business

Marketing is essential for getting your business online in front of customers. With so much competition online, you need a strategy to stand out. Here are some of the best ways to market an online business:

Focus on SEO

• Research keywords that relate to your products or services. Identify terms people are searching for.
• Optimize your website content, page titles, headings, URLs, alt text, etc. to target those keywords. This helps your site rank higher in search engines.
• Produce blog posts and other content that answers questions potential customers have. Quality content boosts SEO.
• Get other reputable sites to link back to your website. Inbound links signal search engines that your content is valuable.

Leverage social media

• Create business profiles on platforms like Facebook, Instagram, Twitter, LinkedIn, YouTube, Pinterest, and TikTok. Engage your audience there.
• Post content regularly to build an audience and get discovered. Mix promotional content with valuable, sharable content.
• Use hashtags related to your niche to expand your reach. Interact with followers and influencers.
• Run contests and other promotions to incentivize social sharing and follower growth.

Advertise online

• Google Ads and Facebook Ads allow you to target very specific demographics with your ads. Start small to test effectiveness.
• Retargeting ads follow site visitors around the web to remind them about your business.
• Affiliate marketing pays others to promote you. Find influencers or sites related to your niche.
• Sponsor content and ads on industry websites. Partner with complementary brands for co-marketing.

With the right online marketing strategy combining SEO, social media, advertising, and more, you can build awareness and drive sales for your new online business. Continually test and optimize to maximize results.

Handle Finances

Managing the financial side of a company is critical, whether you are just starting out or are an established business. Some key financial considerations include:

Accounting

• Choose an accounting system like QuickBooks or Xero to track income, expenses, accounts receivable/payable, and run financial reports. An accounting system helps you understand the financial health of your company.
• Set up a chart of accounts that matches how you operate your business. Common accounts include income, cost of goods sold, operating expenses, assets, and liabilities.
• Establish an accounting process including invoicing clients, paying vendors, tracking receipts, and reconciling accounts. This keeps everything organized and up to date.
• Consider hiring an accountant, at least in the beginning, to set up your system and ensure you are recording transactions properly.

Billing and Payments

• Invoice clients on a regular schedule and integrate invoices with your accounting system. Send automatic payment reminders to avoid late payments.
• Choose an online payment system to accept credit cards, eChecks, and international payments. Options like Stripe, PayPal, or Square integrate with your website and accounting software.
• Set up merchant accounts with your bank to accept credit card payments directly. This may have lower fees than third-party processors for higher volume businesses.
• Accept various payment types – credit cards, debit cards, ACH bank payments, PayPal, etc. Give clients multiple options to pay you conveniently.
• Carefully manage cash flow – when you get paid versus when you pay expenses. Keep enough cash reserve so you can cover costs even with payment delays.

Proper financial management and cash flow gives you insights into your profitability and the overall financial health of your online business. Invest time in managing the numbers correctly from the start.

Comply with regulations

Running an online business comes with legal and regulatory requirements you’ll need to stay on top of. While this may seem daunting, having good processes in place makes staying compliant much more manageable. Here are some key areas to focus on:

Taxes

• Determine if you need to register your business for federal, state, and local taxes. Most businesses need an Employer Identification Number (EIN) even if they have no employees.
• Understand if you need to collect sales tax in states where you have a nexus. Many states require this if you have any physical or economic presence.
• Track business income and expenses. You’ll need to report these to calculate your tax liability each year. Using accounting software can make this easier.
• Pay estimated quarterly income taxes to avoid underpayment penalties. This is required if you expect to owe $1,000 or more when you file taxes.
• Hire an accountant or tax professional if you need help navigating business taxes. This is often worth the expense when starting out.

Insurance

• Look into business insurance policies like general liability and errors and omissions insurance. These can protect you in case clients sue you for things like negligence, copyright infringement, etc.
• Consider cyber insurance if you store sensitive customer data. This can offset costs if you experience a data breach.
• Review health insurance options if you plan to hire employees. You may be required to provide coverage depending on your state and number of employees.

Legal Issues

• Consult a business attorney when forming your business to ensure you’re complying with relevant laws.
• Have contracts and legal agreements in place with contractors, clients, and vendors.
• Understand laws related to your industry, such as privacy policies if you collect customer data.
• Register for copyrights, trademarks, or patents to protect your intellectual property if applicable.
• Create internal policies as your company grows to comply with employment law. This includes topics like anti-discrimination, sexual harassment, overtime pay, and family leave.

Staying legally compliant may involve some upfront work, but protects you from issues down the road. Partner with legal and accounting professionals to ensure you have the right foundations in place as your online business grows.

Manage remote teams

With more businesses operating remotely, effective communication and collaboration are critical for success. There are many tools available to connect distributed teams and enable seamless workflows.

• Video conferencing – Services like Zoom, Google Meet and Microsoft Teams facilitate meetings, trainings, and presentations via video chat. Features like screen sharing and recording are useful for collaboration.
• Team chat – Messaging apps like Slack and Microsoft Teams let teams have conversations, share files, and integrate with other tools. Different channels can be set up for projects, topics, or teams.
• Project management – Applications like Asana, Trello, and Basecamp provide ways to assign tasks, set due dates, track progress, and visualize workflows. Some include time tracking and integrations with other programs.
• Document sharing – Google Drive, Dropbox, Box and OneDrive enable real-time document creation and editing. Version histories allow tracking changes over time.
• Virtual whiteboards – Miro, Mural and Conceptboard offer digital spaces for team brainstorming sessions, with options to add images, notes, diagrams and more.
• Email – While not the most innovative tool, email remains essential for formal announcements and delivering important information to the full team.

With the rise of remote work, selecting and standardizing on primary platforms for communication, collaboration, and project management is key. Training employees on effectively using these tools ensures everyone can work together smoothly.

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