How to start an online business?

So you want to start a business selling stuff online?

If you want to start an online business selling stuff on the internet, you have to start our right. Beyond a solid business plan, you need to become legal. If you’re going to selling retail and creating wholesale relationships with manufacturers or wholesalers, they will not take you seriously unless you are a legal entity with a State and possibly a Federal Tax ID number.

You become a legal entity by formally creating a business organization in your state. Go to your states website for information, you can probably do it online. You have to decide the best structure i.e., Sole Proprietorship, LLC, S-type Corporation, etc. There is typically a fee for establishment of a formal business name for a particular state. Your accountant or tax attorney can help you here if you have questions.

Once you receive the business entity documentation, you can very quickly procure a State Tax ID Number and a Federal Employer Identification Number (EIN). You can get both in about five minutes online. Start with the Federal (you may not need it – but you might to do your state ID, so get it anyway).

For the Federal ID, go to:

For your state, do a search for “Your State” + “Department of Revenue” + E-services; or something like that. In Minnesota for example a search such as this works well: “mn tax id”. The website here is:

Literally you can have both these numbers FOR FREE within 30 minutes.

As you establish relationships with suppliers, most will ask for these number. If all you have is your SS#, they may regard you as amateurish and not treat you with the same respect as a more formally organized entity.