April 7, 2020
How to Start an Online Retail Business

How to Start an Online Retail Business

hey it’s patti scharf CPA and co-founder
of catching clouds the leader in e-commerce accounting today we’re going
to talk about how to start an online retail business and I want you to stick
around to the end because I’ve got something that I want to give you that
has lots of resources and will help give you kind of a step-by-step on how to get
started I’m going to go through the topics here pretty quickly because
nobody wants to sit around and listen to me talk for 45 minutes about all the
steps you need to take all right so I’m gonna do a really condensed version I’m
going to tell you what I’m not going to do is I am NOT going to talk about
sourcing products I’m not going to talk about marketing I’m not going to talk
about lead generation or any of that kind of stuff
because that has been covered ad nauseam on YouTube to date and I’m gonna focus
on the stuff that I really know the most about and that is the back office
business side of things all right so let’s just jump in and get started all right the first thing that you need
is a foundation so your foundation you need to go talk to a CPA and an attorney
either one can probably fill in for the other in a pinch but really it’s good to
have one of each of those because you’re gonna need somebody in your court down
the road but if you meet with them right up front even if you don’t have any
money they’re not going to charge you that much for an hour consultation to
help you pick your entity type and to help just kind of tell you what pitfalls
are coming up that you can avoid all right it’s the this is one of those
times where you it’s much more expensive to have to fix something that you
screwed up then to find out the right way to do things right up front all
right so find a CPA find an attorney consult
with them you’re gonna pick your legal entity type you’re gonna picture pick
your tax entity type whatever is best for your situation you need to register
your business with the IRS you’re gonna need to register your business with the
Secretary of State if you have a trade name or something like that that you
want to use that’s different from your legal name then you want to register
that you’re going to open up a business checking account because you do not want
to be combining your business and personal finances those need to be
separate and so that you can have clean information for both all right as soon
as you have something worth protecting make sure you go get some business
insurance talk to an insurance agent they’re like a hundred billion different
types of insurance I didn’t even know until like I don’t know seven years ago
when we got it that’s such a thing as cyber liability insurance existed go
talk to an ins an insurance agent see what kind of protection you need because
the last thing you want to do is spend all this time and energy to create this
amazing business just to lose it through no fault of your own the last thing is
if you need to collect sales tax and remit it to your state make sure you
register for a sales tax license it is illegal to collect sales tax
when you don’t have a license so make sure you register if you’re going to get
one if you don’t know about all the sales tax rules talk to a CPA you can
actually get started there there’s some changes recently that came down the pike
on sales tax I mean and when I say recently I mean
like two weeks ago and you can check out this video here it’ll give you some more
information about what kind of implications there are for you alright
so the next thing you’re going to set up your operational systems you’re going to
find out what shopping cart or marketplace you’re going to sell on
chances are you already kind of suspected what you were gonna be doing
in advance before you even really got this far but whether you’re selling on
Amazon shopify bigcommerce Magento on your own site or on or on a marketplace
like eBay or something like that figure out which platforms you’re going to use
you’re gonna need to vet some of the payment processors and get at least two
because you don’t want to have just one payment processor and then you forget to
pay your monthly bill or like your credit card expires that has that
monthly bill attached to it and so you’ve got three hundred thousand
dollars a month coming in on Shopify but you forgot to pay your thirty nine
dollar bill and so they just turned off your payment processor and now you can’t
collect any money from your customers that’s not a good thing so get to
payment processors one is your normal one and one is a backup one just to
protect yourself in case something gets hacked or anything else alright once you
have your shopping carts you have your payment processors go into your shopping
carts and make sure that you have set the sales tax settings appropriately for
your business if you do not have a sales tax license somewhere go in and make
sure that they are not collecting sales tax if you do have sales tax license go
login and make sure that you are set you’ve set it up to collect sales taxes
and make sure you’re collecting it everywhere so if you’re collecting on
Amazon in 23 States you need to be collecting in 23 states also on Shopify
eBay and all the other places next you’re going to set up your accounting
systems one of the most important ones for you
as an online retailer is going to be especially if you’re selling on multiple
different platforms is going to be cloud inventory system I’ve got a whole nother
video on cloud inventory go check that out
but it’s it’s really great for operational efficiencies for an
e-commerce seller the next thing you want to take a look at is setting up an
accounting system because you want to make sure that you’re keeping track of
all this stuff that you’re doing so we love zero I know a lot of people like
QuickBooks Online also I’ve got another video that compares the two if you don’t
know where to start regardless of the system you use you
want to be careful about pushing in each individual transaction it can crush your
system it can be impossible to reconcile and if you want more information about
that watch this Shopify video where I talk about all the ins and outs of that
if you are collecting sales tax and remitting it I highly recommend you get
a tool like taksa fight ax gr Avalara that will help you manage your sales tax
manage the payments and manage the sales tax filings that you need to do to stay
on top of all the states and compliance for sales tax okay so after you’ve set
up all those basics basically all you do is you go out and you sell sell sell
sell sell so you can watch all those other videos that I was talking about
before to find out how to optimize your sales and things like that but you’re
going to want to check out different tools that will help optimize your
performance and you want to keep track of how things are doing so some ways
that you can do that your cloud inventory tool is going to have some
great analytics that will help you keep track of profitability by SKU
profitability by order you’ll take a look at things like reprice errs
feedback tools you’ll want to make sure that you’re keeping an eye on your cash
flow because if you’ve got too much money going out for inventory and you
don’t have enough coming back in you could really get into a cash crunch
we’ll talk more about that on another video another time okay so once you have
all those basic set up and it just starts becoming a running
business all you really need to do is just keep learning
just keep your ear to the ground and see what’s new out there keep expanding your
knowledge about the things that you don’t know about if you’re unfamiliar
with some of the more financial aspects of it I highly encourage you to read
simple numbers straight talk big profits I encourage you to read profit first I
encourage you to read the e-myth revisited and making money is ruining
your business so I hope this helped if I went really too fast for you or I didn’t
have enough information please look down below because there’s a link there
that’ll take you to our ebook that we put together called ecommerce startup
how to start your own online business and it’s got lots of information about
all the information I talked about and more and I hope you like this video if
you did please like comment and share if you haven’t already please subscribe and
I will catch you later you

3 thoughts on “How to Start an Online Retail Business

  1. Thanks for watching! What other questions did you run into as you were starting out as an ecommerce seller?

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