How to Start an Online Business

The Internet shopping market is vast, which can be beneficial or detrimental to your goals as a new online business owner. On one hand, you're unlikely to be able to compete with the marketing budgets and Internet presence of monster companies such as Amazon and eBay. On the other hand, small online businesses can offer something large ones can't -- personalized service and expert knowledge about one specialized type of service or merchandise. Do your homework, learn about the world of Internet marketing and plan carefully to succeed at your online venture.

Meet General Business Requirements

Internet businesses have the same requirements as any type of business, including registering a business name and getting a business license. The U.S. Small Business Administration offers tips for all prospective business owners, on and offline. Learn about the basics of starting a business before jumping into your Internet business. Some requirements to meet might include:

  • Find financing
  • Choose the legal structure for your business 
  • Register your business with your state's government office
  • Obtain a tax ID number

Follow Internet Commerce Laws

In addition to the laws governing all types of businesses, certain laws apply to Internet companies. For instance, you must protect your customer's privacy, take extra precautions if they're paying for services online with credit cards, and follow federal and state truthful advertising laws. In some cases, you'll be required to collect sales tax from your customers. The Federal Trade Commission offers a guide to online advertising and marketing. Seek advice from an attorney knowledgeable about Internet commerce in order to ensure that you're following all laws applicable to your business.

Use Internet Tools to Determine Your Market

Check out other websites that are associated with your type of business. For instance, if you plan to sell woodworking tools, find websites where woodworkers gather to get ideas, engage in forums and ask questions. You'll become familiar with your customers and might gain some insight about what kind of products they'd be excited to own.

Complete keyword research to see how many people are searching for your products each month. You'll find many keyword tools available online. Some are free; others charge a small fee.

Learn About Internet Marketing

Marketing an online business is different than that of a local store in your hometown. Instead of signage, flyers and grand opening sales, you'll market with online ad campaigns and use Search Engine Optimization -- specific keywords on your website that helps it appear when people search for your product or service. Learn as much as you can about SEO and online marketing techniques before you start your business. Become familiar with basic techniques, then decide if you'll do your own SEO optimization and run your own ad campaigns, or if you'll pay a company to market for you.

Design Your Website

Your website should look professional and be user-friendly and functional. It's the equivalent of a store or professional office; your customers' first impressions depend on your website. If you already have web programming and graphic design skills, you can easily create your own website. If not, you can learn how to design a website, or hire someone to do it for you.


  • Your domain name is one of the most important aspects of your business. Ideally, you'll find an available name that directly relates to your business and is easy to spell. Register your domain name by purchasing it through a domain company; prices for your name can vary from around one dollar to thousands. Choose a reputable company to avoid losing your money in a scam. The Internet Corporation for Assigned Names and Numbers offers a directory of companies accredited to sell domain names.