One of the most frequently skipped steps in developing an online business is legal preparation. Many times, online businesses believe that profits are more important than anything else, which can lead to legal troubles down the road.
Instead of having to deal with legal issues in the future, it is a better idea to work out legal issues before they even become problems. Thankfully, there are many simple ways that you can create a strong foundation for your online business to be as legal as it is successful.
How to Keep Things Legal
There are a few issues that online businesses need to consider when it comes to legality.
- Trademarks. If you have products that you have developed for yourself, it is a good idea to seek a patent or a trademark to prevent others from copying your work. You will want to apply for a patent through the United States Patent and Trademarket Office (www.uspto.gov) and a trademark through the United States Patent and Trademarket office, as well (http://www.uspto.gov/trademarks/teas/index.jsp). These applications can often be submitted online to help you create legal grounds of protection for your company and its products.
- Copyrights. If you have writing that you want to protect, the copyright office is a strong resource (http://www.copyright.gov/forms/). You will be able to protect your ideas and your actual writing to ensure that no one else can copy it or use it without your permission.
- Poor man's copyright. At the end of each of your website pages, it is a good idea to include something like All Rights Reserved or Copyright 2013. This will give a fair warning to anyone that might want to use your text, showing them that they need to seek your permission.
- Use only images that you own or have permission to use. With all of the images available online, it can seem as though anything is fair game to use, but this is not the case. It is a better idea to seek out photos that you have taken yourself, ask for permission from the manufacturers, or you can buy photos from online photo stock sites (www.istockphoto.com, for example). Other free image sites like www.sxc.hu are good resources, but you still might need to seek the permission of the photographers, so make sure to read the restrictions to see what you need to do.
- Business names. When you want to have your business name trademarked or copyrighted, follow the steps as outlined by those government offices. Before you even choose your business name, it can also help to see if there are any other businesses already online with the same or a similar name to ensure that you are not copying someone inadvertently.
- Business licenses. Depending on where you live, you will need to fill out a form and pay a fee to have a license to run your online business. Check with your local city office to see what is required of you. These licenses need to be renewed yearly.
- Types of business organization. In the beginning of your online business, you are probably going to act as the sole proprietor of your company. This means that anything that happens to your company, you are responsible for taking care of the situation. In the future, it is a good idea to research whether it is a good idea for you to become an LLC (Limited Liability Company), Partnership, Corporation, or another business organization. All of these organizations can help you protect the assets of your company and provide tax benefits. Many online businesses will seek to become LLCs early in their inception so as to protect them from other companies taking their personal assets during business transactions. Additional information about business organizations can be found at http://www.irs.gov/businesses/index.html and http://www.nolo.com/legal-encyclopedia/business-llcs-corporations/.
The more legal steps you can take now, the more you will be set up for long term business success.
Additional small business resources include the following.
How to Keep Your Business Fiscally Responsible
The money that comes in and out of your online business needs to be tracked so that you can not only find out what you are making, but also what you are spending and what this means for your taxes.
As the online business owner, you are responsible for paying taxes and for making sure that you are getting all of the tax benefits owed to you.
Here are some simple tips for making sure that you are keeping your business fiscally responsible.
- Keep track of everything. Everything that is related to your business from expenses to income needs to be accounted for. Whether you choose to use a simple Excel spreadsheet or accounting software, you need to make sure you are documenting all of the ways that money flows in and out of your business.
- Keep receipts as well as copies of receipts. Try to make copies of all of your receipts and income statements, allowing you to have clear records should anyone need to review them. Keep them neatly organized and in a safe place.
- Update your records regularly. While paperwork can be time consuming, you need to make sure you are updating your records frequently. This will allow you to see exactly how much you are making, whether you are spending too much, and other information. A good way to do this is to set up one recurring date each month to catch up on your paperwork, or one day each week.
- Use accounting software. Accounting software like FreshBooks can help you keep track of the income you have and the expenses you have. IAC-EZ.com is another helpful program that you can use online to track your income and expenses, as well as to see how much you need to spend on your taxes.
- Employ a bookkeeper. If you are lost when it comes to finances, it can help to pay a bookkeeper to set up a bookkeeping system for you. They can then check in with you every quarter to update your progress and perhaps to give you advice about what you need to do next.
- Spend only what you have to spend. This seems like a simple piece of advice, but it can be difficult to remember when you are trying to get your business off the ground. Spend only what you need to spend and not much more. This will ensure that you are not getting behind in your bills or that you are not going to have financial troubles should the economy begin to falter.
- Have clear business financial goals. Always have clear financial goals for each month as well as for the year, the next five years, and further. This will ensure that you always know whether you are on the right track or if you need to make changes in the way that you make money.
- Set a budget. It is always a good idea to set up a budget for your business each month. Try to limit your expenses to a certain amount and see where you can cut costs whenever possible.
The more responsible you are with your money at the beginning, the easier it will be for you to maintain your financial fitness as your company grows and makes more profits.
Online Business Tax Advice
While most people do not like the idea of paying taxes, every business has to do so to remain in good legal standing with the government. You will need to make sure you are not only prepared when tax times comes, but that you are able to pay the taxes that you need to pay on time.
The best way to prepare for your taxes for your online business is to prepay your taxes for the tax year. By estimating the taxes that you are going to pay based on what you estimate your income to be that year.
You will make payments on April 15, June 15, September 15, and January 15, though the dates vary from year to year, based on holidays and other special events.
When you make these payments, it is a good idea to not only prepay your federal taxes, but also your state taxes for the state in which you operate.
As you do this, you will end up owing fewer taxes when it comes time to file, plus you will avoid any penalties that can be charged when you do not prepay your taxes.
You can learn more about estimated taxes and find the related forms for federal taxes here. http://www.irs.gov/businesses/small/article/0,,id=110413,00.html
You can prepay your taxes with a check or credit cards. There are services that will help you pay your estimated taxes online, including EFTPS at https://www.eftps.gov/eftps/.
Pay Now or Later
While you might want to put off paying your taxes for as long as possible, you need to pay estimated taxes for your online business ahead of time or else you will incur a penalty.
According to the IRS, you need to pay at least 90% of the taxes through the estimated tax payment service. If you do not, then you will incur a fee that is in proportion to your business' income and to the lateness of the payment.
The fee for underpayment may be waived if the following applies.
- There is a natural disaster or emergency in your area that impacted your business.
- You retired or became disabled during the tax year.
Ideally, it is better to pay your taxes ahead of time as you will be able to focus your budget more easily. Instead of having to pay catch up on your taxes later on, you can get them out of the way.
In addition, if your business does not have as good a year as you expected, you will have overpaid your taxes and you can then get a larger return or apply that refund to the next year's taxes.
Know too that you can pay your estimated taxes as you go and that you do not necessarily need to pay the full amount each time. Just make sure that the entire year's estimated taxes are covered to avoid penalties.
Tax Software and Preparation
Tax preparation software is very helpful when you want to handle your own taxes instead of taking it to a tax preparer.
Many online businesses will use Turbo Tax (www.turbotax.intuit.com) or TaxACT to help them at the end of the year (www.taxact.com).
As for whether you should have a professional handle your taxes, that.is up to you. It can be helpful to have someone else handle your taxes since this means you will have someone who is able to help you in the case of an IRS audit and they can help point out deductions of which you might not be aware.
H&R Block offers tax preparation services, but there might also be local companies that you can utilize as well. In addition, you can seek out a professional CPA or bookkeeper to help ensure that you are prepared for the tax time.
Right now, you are excited about your business and watching it grow. However, you cannot just focus on today, you need to worry about the future of your business as well.
To prepare for the success of your business, you need to think of three things as you continue to grow and to build your company.
While you might have a product or service right now that appeals to people, chances are good that your customer base will tire of it after a while. You need to stay innovative in order to appeal to future customers and to your loyal customers.
- Offer new products.
- Improve on old products.
- Offer related products.
- Create green and eco-friendly options.
By continuously improving on what is already a success, you can make your business seem relevant, even as the market changes, and it will.
Think about what your customers want, and then ask them their opinions. People love to give their opinions about your business, whether you ask them or not, so why not take their advice to heart also?
Ask your customers regularly what you could be doing to improve your business, how it is run, what you offer, and more. The more that you can listen to your market, the more that you will be able to make changes that really add up to success in the long term.
You might want to use the following tools to make sure that your ear is always listening to the market.
- Google Alerts.
- RSS feed.
Google Alerts is a service which allows you to get links to sites that are talking about specific keywords that you indicate. These messages will be delivered to your inbox daily or weekly.
By taking advantage of your RSS feeder, you can see what others are talking about, as they update their site or blog, allowing you to stay one step ahead or have a response for something in your market.
If you do nothing else, you need to stay connected to your customer base. You need to continue to learn from them, find out who they are, and then connect with them regularly through emails, blog posts, and so on. When you start to stay out of contact, this can make customers feel less valued.
Remember, YOU are the one that is the face of your online business, so you need to stay connected to those who have made you a success up to this point.