How to Start an Online Business

Register the Business the Same Way Any Business Does

An online business still needs to choose a structure, file formation paperwork with the state if it's an LLC or corporation, and get a free EIN from the IRS; see our guides on how to choose a business structure and how to register a new business for those steps. Operating entirely online doesn't exempt a business from state formation, licensing, or tax registration requirements.

Build the Site and Secure the Domain

Register a domain through an ICANN-accredited registrar and build the site with the business's actual structure and compliance needs in mind from the start; see our guide on how to build a website for a new business for the domain, accessibility, and privacy steps that apply to any business website.

Know the FTC's Shipping and Refund Rule

Per the FTC's Mail, Internet, or Telephone Order Merchandise Rule, a seller must have a reasonable basis to expect it can ship within whatever time frame it advertises, or within 30 days if it doesn't specify one. If the business can't meet that deadline, it must either get the buyer's consent to the delay or refund the payment for the unshipped merchandise; a seller can't simply extend the deadline unilaterally without the buyer's agreement. This rule applies to any online seller, regardless of size, and the FTC has brought enforcement actions, including multimillion-dollar settlements, against online retailers that violated it.

Register for Sales Tax Where You Have Nexus

Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require an online seller to collect and remit sales tax based on economic activity in that state, such as sales volume or transaction count, even without a physical presence there. Each state sets its own specific economic nexus thresholds and rules, so check directly with the revenue agency of any state where the business has meaningful sales to determine whether registration is required there.

Follow CAN-SPAM Rules for Any Marketing Email

If the online business sends promotional or marketing email, such as a newsletter or cart-abandonment message, the FTC's CAN-SPAM Act requires accurate "From" and subject line information, a clear disclosure when the message is an advertisement, the business's valid physical postal address, and a working opt-out mechanism honored within 10 business days. See our guide on how to get a business email address for setting up the email itself.

Keep Customer Reviews Honest

If the site displays customer reviews, know that the FTC's rule on consumer reviews and testimonials prohibits buying, selling, or faking reviews, and prohibits compensating anyone for a review conditioned on a particular sentiment. This applies to reviews on the business's own site the same way it applies to reviews on any other platform.

Nexus Rules Mean You May Owe Tax in States You've Never Visited

Because economic nexus is based on sales activity rather than physical presence, an online business can trigger a sales tax registration requirement in a state purely through its volume of sales there. Track sales by state as the business grows, since this obligation can arise well before a business owner expects it to.

A Shipping Delay Still Requires Buyer Consent

Even a well-intentioned shipping delay doesn't excuse the business from the FTC's rule; without the buyer's consent to the new timeline or a refund for the unshipped item, the business is out of compliance regardless of the reason for the delay. Build a process for flagging and handling shipping delays before volume makes it hard to track manually.

International Sales Add Their Own Rules

Selling to customers outside the United States can trigger customs, import duty, and consumer protection rules specific to the destination country, separate from everything covered here. Research the specific requirements of any country you plan to ship to regularly before expanding there.

Payment Processing and Data Security Are Ongoing Responsibilities

An online business handling customer payment information takes on data security obligations that a purely in-person business may not face to the same degree. Confirm what your payment processor requires of you contractually, in addition to any applicable federal or state data security law.

This Is Not Legal or Tax Advice

Which sales tax, shipping, and marketing rules apply in full depend on the states and countries the business sells into. Talk to a tax professional about multistate sales tax obligations and an attorney about your specific marketing and data practices.