Business Entity Information for Online Auction Retailers

Online auction retailers are a business like any other. That means income needs to be reported for tax purposes and policies and procedures need to be put into place to protect you as a business owner. It is advised before starting a business to consult both an accountant and an attorney if you have any questions. They will know both your local laws and best practices and can guide you to make the best business decisions for your personal situation. That being said, here are a few guidelines and considerations to get started.

Legal structure. What legal structure will you have for your online auction business? Different legal structures provide different levels of legal protection and have different income reporting procedures. Basic options are; sole proprietorship, partnership, corporation or Limited Liability Company?

Licenses? What type of business licenses do you need to legally operate your business? Some areas require a license to operate a business out of your home. While one of the benefits of owning an online business is that there generally isn’t a lot of regulation it is still important to check with your local City Hall about regulations or business license needs for your particular business and to make sure you’re in compliance.

Insurance. Inventory can be incredibly expensive to replace if there is theft or damage. Additionally, being self employed means you’re responsible for your own medical insurance. What are your insurance needs?

Taxes! How will you keep a record of your expenses for tax reporting? What taxes will you have to pay each year, quarter? The IRS website is a good resource for this information. Finding out this information BEFORE you go into business will prevent a lot of headaches later.

Terms of use and privacy policies. Many online auction retailers find it is helpful to have a website. If you have a website you will want to include a terms of use statement. A terms of use statement or privacy policy. It basically details your privacy protection policies. Take a look at the statement on this site

There are lots of resources for online auction retailers both via online auction sites, local small business association and the IRS website. If you have any questions consult an attorney and/or an accountant for advice.

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