Cut the Virtual Ribbon: Starting an Online Business

by Marty Wolzen on April 25, 2013 · 9 comments

In generations past, great business ideas were relegated to pipe dreams if aspiring entrepreneurs didn’t have considerable resources. The Internet leveled the playing field. Today, anyone with an idea and healthy curiosity can have a money-making operation online in hours. All online businesses are not created equal, however. It may be a new platform, but when money is on the table, entrepreneurs must jump through many of the same hoops as brick and mortar small business owners. From gathering start-up capital to complying with tax laws, starting an online business isn’t your average web surf.

Online business

If you’re ready to scratch that entrepreneurial itch, a few basic principles can set you on a path toward success. Take your time, and lay a foundation for success. You’ll thank yourself down the road.

Raising Capital

The passion and adrenaline that drives aspiring entrepreneurs can only take you so far. After that, the focus shifts on raising money to take the next step. Traditionally, entrepreneurs look to banks and venture capitalists to provide loans and front cash. Online businesses aren’t exactly a sure-thing, though, so many owners hesitate to tie themselves down to a financial agreement.

While starting a business online is usually considerably cheaper than a tangible business, the cost of buying a domain name, renting a hosting service and hiring a web designer can add up quickly. Entrepreneurs short on cash can consider a new business credit card, which offers customizable rewards based on your industry and business habits. Some credit card providers offer discounts for early payments, so the sooner your business starts turning a profit, the better.

The Internet takes care of its own, and a new trend in financing can provide cash for great online ideas. Crowdfunding offers the opportunity to get an influx of cash. Through this process, investors provide aspiring entrepreneurs with cash in exchange for products of shares of the business. is one of the most popular crowdfunding platforms online, and businesses can start campaigns in minutes. Wow users with your pitch and they can donate cash straight to your cause. Current Kickstarter campaigns include a business that builds online custom designed guitars, an online role playing game and a series of online news sites.

Becoming a Business

It’s one thing to throw up a website to make a quick buck, but building a viable, lasting business requires a sound legal structure. Most small businesses fall under one of two categories: sole proprietorship and LLC. A sole proprietorship describes a business run and owned by an individual with no legal distinction between the individual and business. Sole proprietors are not required to obtain an Employer Identification Number. An LLC qualifies business as an entity separate from its owners, protecting partners from being held personally liable for business transactions, according to Many states permit “single-member” LLCs for individual business owners.

These distinctions dictate tax requirements. LLCs are treated as separate entities and therefore have to file taxes separately. On the other hand, sole proprietorships file one set of taxes with additional forms, according to

Online business owners can register with the federal government at and with state agencies through local secretary of state websites.

Launching a Website

A business website needs a host, and owners have plenty of options when it comes to web host providers. According to, small businesses can expect to pay between $5 and $15 a month for service under a hosting contract. The ideal web host has a strong reputation for reliability and customer support. Web design can take on varying levels of importance depending on the nature of the business. A personal art website, for example, will put a premium on web design consistent with the art. An ecommerce auto parts shop, on the other hand, requires more functionality than aesthetic beauty. provides a network of web designers for any budget. Business owners can browse through online portfolios to find a style and price match. Sortfolio even allows you to search designers by city, so business owners can have a face-to-face meeting with a potential partner.

Spreading the Word

A great idea, sound legality and cutting-edge technology don’t mean much to an online business unless they lead to a profit. Don’t be disturbed if the iron doesn’t spark fire on your first strike. The Internet is a vast land filled with content, and it takes time to get the ball rolling. Start with some free marketing. Social media provides businesses with platforms to connect with potential customers. Unveil your new venture within your networks on Facebook, Twitter and Linkedin. If they find value in your business, they’ll share it with their networks.

Hopefully, your business offers a product or service no one else does. Strive to make your marketing equally unique. The web shattered traditional marketing principles long ago. No longer do consumers flock to products with catchy jingles and glossy faces. Online consumers connect with humor and multi-media content.

No formula guarantees success for your online business. The same curious spirit that led you to start your own venture will guide you to success. As you look to bring your business to life, however, these basics keep the end goal in mind.


Marty Wolzen authored this post.

Marty started his first LLC when he was 10; it was a car wash/kiddie daycare. Splash N Dash is still around, but he sold it to his brother so he could have more time to play golf and be a freelance writer for finance.

{ 9 comments… read them below or add one }

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