Online businesses are becoming more commonplace, especially those that are based out of the home. Having an online presence can help even the smallest company generate a national, or even international, presence and thus expand their customer base and potential revenue. The phrase “online business” typically refers to businesses that generate a substantial amount of their revenue through one or more Internet websites. A basic online business will have a website that provides information about their products and services, while more advanced online businesses allow customers to make purchases online. The ability to accept online payment is becoming increasingly important as more customers become comfortable with this purchase method.

The process of starting an online business, even one based in a home, still requires that you properly establish and operate your business. As with any type of business, there are certain legal, tax, and other business issues that must be addressed. Some of the key issues include:

• Setting up and maintaining the appropriate business legal structure
• Obtaining all necessary business licenses, tax numbers, and permits
• Registering for and submitting all required tax documents on a timely basis
• Submitting all required legal documents on a timely basis
• Obtaining any necessary business insurance
• Adhering to required employer responsibilities if employees are involved
• Opening a business bank account and setting up an accounting system

More information on many of these topics can be found in the Kentucky Business Guide.

Additionally, for online businesses, there may also be special Internet laws and regulations to be adhered to, depending upon the type of online business being established. You may want to seek professional advice from an attorney and/or accountant to help establish and maintain the business properly.

For additional information or assistance, please email us at cedsbsd@ky.gov or call 800-626-2250.

Additional Resources:

U.S. Small Business Administration (SBA) information on getting on the web http://www.sba.gov/smallbusinessplanner/manage/technology/
SERV_GETTINGONWEB.html

SBA information on eCommerce http://www.sba.gov/smallbusinessplanner/manage/
technology/SERV_ECOMMERCE.html

U.S. Internal Revenue Service (IRS) information on electronic business http://www.irs.gov/businesses/small/article/0,,id=108188,00.html

Entrepreneur Magazine information on E-Business http://www.entrepreneur.com/ebusiness/

Entrepreneur Magazine information on the legal aspects of an E-Business http://www.entrepreneur.com/startingabusiness/startupbasics/
legalissues/article57798.html

Entrepreneur Magazine additional information about online legal issues http://www.entrepreneur.com/ebusiness/operations/
article60918.html

SBDCNet E-Commerce Guide http://sbdcnet.org/SBIC/e-com.php