Beginners Guide to Selling Online

Selling online is my success story! When my husband and I first started selling on the Internet, I looked at the fact that my husband was good at woodworking and he had a passion for it. I had extensive knowledge of how to use the Internet for business since in my spare time I would spend it learning everything I could about the Internet. My creative juices begin to go into overdrive as I thought about his skills and my knowledge of the Internet.

To make a long story short we started out in the business offering our very own unique designs of unfinished wooden products. The business did quite well and it took off quickly! One of our wooden boxes was featured on the Martha Steward Show way back when she was hosting a craft show on TV. Our Wooden Box business was also featured on an episode of Extreme Home Makeover! And the rest is history.

Benefits of Selling Online

Selling Online is one of the fastest-growing sources of mail-order sales. It’s estimated that e-commerce sales have been growing nine times faster than traditional in-store sales since 1998. According to The U.S. Census Bureau’s report on retail sales in the US, the total e-commerce sales for 2019 are estimated at over $600 billion dollars, in revenue and it is expected to continue growing! It is also one of the quickest and easiest ways to begin making money online.

Many consumers have turned to e-commerce as a matter of convenience or to increase the variety of goods available to them. Whatever the reason, retail e-commerce sales have skyrocketed and the Internet will undoubtedly continue to influence how consumers shop. With so much potential in the market, it’s the perfect time for entrepreneurs to get started selling products online. As the Internet has become ubiquitous, many retailers have created websites and even entire divisions devoted to fulfilling online orders.

What is exactly is e-commerce?

E-commerce is commercial transactions conducted electronically on the Internet. Before you dive right in there are some things you have to consider such as:

Is it a Hobby or A Business

According to the IRS.. it is not a hobby if you are buying and selling goods online with the intention of making a profit.  In other words, if you plan to sell your handmade items online in marketplaces such as Esty or eBay or on your own website with the intention of making a profit which most people are, then you are in Business.  And therefore required to report your income to the IRS.  Starting a business online is no different than starting any other business when it comes down to the law. 

Do you plan to sell your products retail or wholesale ?

If you are in the business of selling products to the general public then you are a retailer. Wholesalers generally sell products business to resell the products. Companies operating as wholesalers are not required to collect sales tax but they must register with their State revenue office as a wholesaler. Depending on where you live it could vary as to whether or not you have register as a wholesaler. When in doubt check with your State revenue office and/or local county clerk’s office.

Applying For A Sales Tax Permit

As a retailer selling goods over the Internet you are expected to collect sales taxes on behalf of your State Revenue Office. You can apply for a sales tax permit with your State Revenue Office.

Your Sales Tax ID Will Serve Two Purposes:

  • The Sales Tax Id gives the seller of retail products the right or permission to collect sales taxes from their customers on behalf of the government. You are required to remit the sales tax to the state revenue office monthly or semi-annually depending on your state tax requirements.
  • The sales tax permit enables you to purchase products or supplies from a wholesaler and not have to pay sales tax, as long as the products or finished product is intended for resale to the general public.

How To Apply For A Sales Tax Id:

To apply for a sales tax id contact your State revenue office and request an application for a re-sellers certificate or seller’s permit.

Collecting Sales Tax

In the past, you only need to collect taxes on the money you collected from customers living in the State where your business(s) is located. The laws are constantly changing it is best to check with your state revenue office for more clarity on how to handle the collection of customer sales tax in the state where your business is located.

Communicating with customers

Customers like doing business with businesses that offer live customer service. It is a good idea to have a  phone line for your small business separate from your personal phone. When I first started my business way back when cell phones were not as popular as they are today and the cost of having two phones was out of the question. I used what was called an Identity ring. The identity ring allowed me to have an extra telephone number. When the phone rang it had a different ring from my primary number, therefore, I was able to tell when a business call was coming in. The cost was minimal and much cheaper than the cost of a business line.

PO Box Versus Using a Home Address

Setting up a small business Post Office box is very simple and the investment is minimal. A Post Office Box is like having a virtual office address. PO Boxes helps to increase a small business’s professional profile by providing postal addresses that are indistinguishable from larger competitors. 

Some other reasons to consider a PO Box are:

  • It does not expose your home address in your advertisements.
  • It protects incoming packages from theft,
  • It provides home business owners with anonymity on the Internet.
  • It eliminates the need for a change of business address if the business relocates.