If your goal is to sell goods and services on the web, you may be asking “Do I need a business license to sell online?”
The answer may surprise you. This is one area that is very confusing for people – especially since there are ‘garage sale type’ online businesses that allow for sales without a business license.
So, let’s take the story of Jed to illustrate what you should do when considering selling online.
Jed, a self-taught electronic cigarettes product manufacturer, developed his first viable e cig juice last year…which was quite a hit with his friends. Soon, word began spreading and Jed was getting multiple requests for various e cig liquids and flavors.
From Jed’s perspective, his sales were going up and up, and he felt that he needed to expand the business by taking his goods and services online.
Because of the fragile nature of storing his e cig liquids in specialized storage bottles, he opted only to market to people in the United States – preferably just in the northeastern states.
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What are the Tips and Tricks for Having an Online Business?
Just like Rod and James [See the story of Rod and James, the NYC-Chicago couriers in the last post: What Is A High-Risk Merchant Account?], Jed was needing to decide if he would make a real business online to sell his e cig formulations.
By selling e cigarette juices and accessories, Jed would need a payment gateway established with a high-risk merchant account provider like High Risk Solutions.
Make sure you are doing these things at a minimum:
- Collect the proper taxes
- Keep things private and secure
- Check zoning laws
- Get a merchant account provider that will really help you
The biggest thing to keep in mind is this: Doing things right the first time saves a lot of hassle later on for your business.
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Collecting Sales Taxes
Sometime people start selling a product before they get their business license; unfortunately, they miss the critical step of collecting sales tax on the transactions. Sales tax typically applies only to transactions made between buyers and sellers within the borders of the same state. However, there can be exceptions to this rule. Check with your state’s department of revenue for more information.
Although, Jed was selling his e-liquid recipes to his friends, he was not writing down the amounts at first. This meant that he did not collect sales taxes at the beginning, which could cost him later.
If your state requires sales tax on products and services, then it is the responsibility of the vendor to collect the sales tax at the time of the transaction.
When you have a business license, it becomes a lot easier to ask for the sales tax amount as this is normally expected.
Once Jed’s friends learned to expect to pay the price plus the allotted sales tax, they started to treat Jed with more respect as a business owner.
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Customer Privacy and Data Security
Storing your customer data in a private and secure manner is a sure way to earn a client’s trust for future business. No one likes the emotional distress caused by find out your personal data was stolen.
When looking into how to protect his merchant account information, Jed found out about the “Payment Card Industry Data Security Standard“.
This standard is a terrific set of rules to make sure that your data is safe, your customer data is safe and that there is minimal chance of identity thieves stealing your customer data.
For example, it is not a good idea to store customer card data on your own computer. Your computer (no matter how secure you think it is) can be breached.
The best case scenario is that your customers are upset and never do business with you again. The worst case scenario is that one or more of them decide to pursue legal action against your company and perhaps you personally.
A better way of handling a situation like this is to use a merchant payment gateway that you trust, and that is also there to make sure your customers are safe, too.
A sure way to make sure this happens properly is to use High Risk Solutions as your merchant account provider.
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Check Local Zoning Laws Even for an Online Business
Jed found out that in order to process the e cig juice bulk orders, he would need to move a portion of his business to a more industrialized area…one that was set up to deal with bulk storage of chemicals.
Jed needed to rotate his stock often to be in compliance with the zoning laws. As he manufactured more and more e cig juice bottles, they started to take up more room.
Luckily for Jed, there was a hookah bar opening in Philadelphia. The hookah bar owner, Tanner, expressed interest in “the best e cig juice south of Chicago” in Chicago Heights.
Jed’s e cig juices and specialized bottles would be an even exchange for some artistic hookahs that Jed could use for display in his new e cig store.
Tanner even wrote Jed a Letter of Intent To Purchase to signify that he wanted to place a large order of e cig juices. Tanner thought this would help Jed get a merchant account with a large order in place.
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Merchant Account Difficulties Outside Of Chicago
When Jed tried to set up a merchant account for future orders (and even his guaranteed pre-orders), he was denied by several local banks, due to the “high-risk” nature of his business. It did not matter that his sales were “guaranteed”, the banks still did not want to take the risk. Getting a business bank account is more and more difficult.
Regardless of the merchant account difficulties, Jed still sent Tanner the e cig recipes and bottles via a new courier service that handled very delicate and precious items (Rod and James to the rescue!).
When Jed met up with Rod (the Chicago brother and courier from the previous story) to pick up his boxes of bulk e cig juice bottles, Jed expressed his frustration about not getting his merchant account established.
Rod suggested High Risk Solutions, and it was not long before Jed had his electronic cigarette online store up and running.
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Hookah Bar Gateway Conundrum In Philadelphia The City Of Brotherly Love
Tanner, owner and manager of the hookah bar, also wanted to start selling his wares online. He was perplexed to find out that is was very difficult to set up a hookah accessories gateway for his online shop.
Tanner knew that going to a regular bank to get a merchant account would be difficult because his wares were just barely legal, but Tanner never imagined that finding a trustworthy payment gateway service online would be so daunting.
When James (the NYC brother and courier from the previous story) arrived to drop off the e cig juices to the hookah bar, Tanner expressed his frustration of not finding a decent way to get paid online.
James told Tanner about High Risk Solutions; and within a short period of time, Tanner was approved for his hookah payment gateway and started selling accessories, cleaning supplies, and replacement parts online.
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Yes, You Need A Business License To Sell Online
If you do not follow the steps above, you may be learning how to shut a business down – your business – before it really even starts. It is clear that if you are collecting money for sales now or you plan to in the near future, a business license and a merchant account provider is a stellar idea. And, if you are selling things via the Internet that are not just personal items, then you need a business license to sell online.
After you get your business license, you will want to see if your business is in the high-risk industry list before wasting your time with a merchant account application from a standard bank.
Make sure you are doing these things at a minimum:
- Collect the proper sales taxes
- Keep customer data private and secure
- Check zoning laws to avoid surprise moving costs
- Get High Risk Solutions as a strategic partner and payment gateway solution
High Risk Solutions is here to help out people like Rod, James, Jed, and Tanner to get the payment gateway access required to start accepting credit cards from customers right away.
High Risk Solutions is here to facilitate the transfer of funds from your customer’s credit card into your established merchant account.
Because High Risk Solutions has been providing services since 1995, they have obtained many relationships with banks (both foreign and domestic) to provide the best service possible.
Therefore, the staff at High Risk Solutions have the expertise and experience to expedite your application processes and get your merchant account set up properly.
Sign up with High Risk Solutions right here.
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