Unlike traditional brick-and-mortar businesses, online businesses typically have lower startup costs, offer location flexibility and can reach a global audience. It's often possible to automate many processes of your online business, which means you can scale faster and more efficiently than a brick-and-mortar shop – but it can be difficult to know how to get started.

Whether you're looking to monetise a passion and start a small business or explore a business model that can grow easily, below is a guide to getting started with an online business. We'll explain how to register your business, develop marketing strategies, meet compliance needs and more.

What's in this article?

• How to choose the right online business idea
  
• 8 steps to start an online business
  
• How to register your online business
  
• How to set up your website
  
• How to set up your e-commerce platform
  
• How to develop a marketing strategy for your online business
  
• How to convert visitors into customers
  
• Common challenges when starting an online business and how to overcome them
  
• How to stay compliant with online business regulations
  
• How Stripe Atlas can help
  

How to choose the right online business idea

Here's what to consider when choosing a business idea to pursue.

• Skills and interests: Identify your passions and skills. Are you particularly creative? Technically gifted? Working with your strengths makes it more likely you'll stay committed to your business, especially during difficult periods. If you're passionate about fashion, this could mean developing your own clothing line or selling vintage clothes.

• Market research: What's trending? Is there demand for the kind of business you're considering? Research competitors and see how you can make something different or better. Think about your target audience. Who are they and what are their needs? Your business should be a solution to a problem or a service for which people are actively searching – for example, selling plastic-free cleaning products in a market where none currently exist or where the current offerings get negative reviews.

• Opportunity for growth: Is this business idea something that can grow over time? Digital products, subscription services and online courses are examples of models that can expand without requiring major increases in resources.

• Startup costs: Evaluate the startup costs and logistics. Online businesses such as dropshipping require minimal investment, while others need more up-front resources for software or inventory. Weigh the potential profit against what you'll need to spend.

8 steps to start an online business

Put your plan into action. Here's an overview of how to start your online business. This article explains these steps in more detail further below.

1. Develop a business plan: Start by mapping out your business idea. Outline your products or services, target market, marketing strategy, and revenue model. A solid plan will act as your roadmap and help you secure funding if needed.

2. Set goals: Break down your objectives into short-term and long-term goals. Short-term goals might include launching your website or securing your first customer, while long-term goals could involve scaling the business or hitting a revenue target.

3. Choose the right structure: Decide on the business structure that fits your needs. This might be a sole proprietorship, LLC or corporation. Each type of structure has different legal and tax implications.

4. Register your business: Register your business with the appropriate government agencies and obtain any required licenses or permits. The specifics will depend on your location and industry.

5. Create a website: Choose a platform that suits your business's needs (e.g. Shopify for e-commerce, WordPress for blogs). Make sure your site is user-friendly and mobile-optimised and that it showcases your products or services effectively.

6. Develop a digital marketing plan: Use SEO, email marketing and social media advertising to attract customers. Test a variety of strategies to see what works best for your business.

7. Launch your business: Once your website and marketing plans are ready, launch your business and start driving traffic to your site.

8. Grow a social media presence: Build your brand on social media platforms to reach your audience, grow a community and drive traffic to your website.

How to register your online business

Registering your business is one of the first steps you need to take before you start selling products or services. Here's what the registration process entails.

1. Choose a business name: Choose a name that reflects your business. Ideally, it will be catchy and easy to remember. Look it up in your state's business registry to ensure the name isn't already taken by another business. Also, check the US Patent and Trademark Office (USPTO) for any trademarks that could cause issues later.
   
2. File for an Employer Identification Number (EIN): An EIN allows you to keep your personal and business taxes separate. With it, you can hire employees and set up a business bank account. To get an EIN, fill out the online form on the IRS website with your business information; you'll receive it immediately once you're done.
   
3. Register for taxes and permits: Depending on your business type, you might need to register for federal, state or local taxes. In most cases, you'll use your EIN to register with your state for tax purposes. Certain businesses, such as those in the food or health industries, need extra permits to operate legally. Check with your local government to find out which ones apply to you, if any.
   

How to set up your website

Your online presence can make or break your business. Your website needs to look professional, be easy to use and work smoothly on mobile devices. People shouldn't have to search for a long time to find basic information, so make sure contact details, product pages and the site menu are clear and accessible. Here are some other important considerations when creating your online presence.

• Choose a strong domain name: Pick a domain name that clearly connects to your business and is easy to spell. It should be unique enough that people remember it.

• Pick the right platform: Depending on what you're selling, you'll want to choose a platform that fits your needs. For example, Shopify works well for e-commerce, Wix is beginner-friendly, and WordPress is very flexible.

• Pick a reliable hosting service: Your hosting provider keeps your website online. Look for a reliable option with good customer support, such as Bluehost or SiteGround, to avoid site slowdowns and crashes.

• Do keyword research: Research the keywords your target audience is searching for and use them thoughtfully throughout your content. Generally, the more relevant your content is to users' searches, the higher you'll rank on Google.

How to set up your e-commerce platform

Selling products, services or subscriptions online requires a strong e-commerce setup with payment capabilities, inventory management and a fulfilment strategy. Here's how to put all of this in place.

• Choose the right e-commerce solution: Different e-commerce platforms have different features. Shopify is a user-friendly platform that offers multiple tools to help your business. WooCommerce integrates with WordPress for additional customisation, and BigCommerce is useful if you're planning to scale your business quickly. Choose a platform based on your business size, goals and comfort level with technology.

• Set up payment methods: Include multiple payment options so it's as easy as possible for customers to buy your products. Most e-commerce platforms make it simple to integrate basic payment methods, such as credit cards and digital wallets, so you can give customers an effortless checkout experience.

• Manage inventory: You need to monitor your inventory closely when running an e-commerce operation. Tools such as Shopify Inventory, Zoho or TradeGecko help you track stock levels, avoid over-ordering and manage product variations.

• Assess fulfilment options: You can either pack and ship orders yourself or fulfil orders using a third-party logistics (3PL) service such as ShipBob or Fulfillment by Amazon (FBA). Self-fulfilment gives you more control but can be time-consuming, while 3PL services handle everything for you and allow you to focus on growing your business.

How to develop a marketing strategy for your online business

Driving traffic to your business's website requires a mix of organic SEO efforts and targeted paid strategies. Combining SEO, content marketing, paid ads, social engagement and thoughtful partnerships can help your business reach the right audience, earn money and continue to grow. Here are the first steps for developing an effective marketing strategy.

Target audience

Before you start marketing your business, you need to identify your ideal customer. Use the findings from your early market research to determine what kind of person wants or needs your products or services and create a buyer persona to guide all your marketing decisions.

Content marketing and SEO

You need to create high-value content to drive organic traffic to your site, while building authority in your business's niche. Write blog posts, film short videos or create infographics that address your audience's needs and concerns. Focus on both on-page and off-page SEO to improve your search rankings: research keywords to use throughout your site and regularly update your content to stay relevant.

Social media marketing

Social media allows you to connect with your audience. Each platform has a unique audience and style, so you will need to tailor your approach accordingly. Facebook and Instagram are ideal for visual content, while LinkedIn is more suited for B2B and networking. Use these platforms to create a community around your brand by facilitating meaningful interactions, organising giveaways and sharing valuable content. When done well, social media campaigns can expand your reach substantially and drive consistent traffic to your site.

Email marketing

Like social media, an email list lets you communicate with your audience directly, so it's worth building one from the beginning. Use lead magnets, which are free products or services – such as guides, classes or exclusive discounts – that businesses offer in exchange for sign-ups. From there, you can segment your email list to send more personalised emails. Keep the content relevant, whether you're pursuing leads, advertising promotions or providing business updates. You can A/B test subject lines and content to boost engagement and conversion rates.

Paid advertising

Invest in pay-per-click (PPC) ads, such as Google Ads, Bing Ads or Facebook Ads, for immediate visibility. Target specific audiences with tailored ads and pay attention to performance metrics such as CTR (click-through rate) and conversions. Use retargeting ads to bring back visitors who've interacted with your site but haven't purchased anything.

Collaborations and partnerships

You can grow your business's exposure, build your credibility and expand your network by collaborating with other businesses that align with your brand. Partner with complementary businesses for cross-promotion across your social media platforms and email lists.

How to convert visitors into customers

Create an environment where visitors are more likely to convert into paying customers. Improve the user experience, craft strong calls to action (CTAs), test regularly and showcase trust-building testimonials. Here's what each of these methods entails.

User experience (UX)

A smooth, intuitive website experience helps keep visitors coming back. Ensure your site is easy to use, loads quickly, and works across all devices. Clunky layouts or long load times lead to high bounce rates – don't give users a reason to leave before they have a chance to explore.

Effective CTAs

Your CTAs should be clear, action-oriented and strategically placed throughout your site. Phrases such as "get started," "sign up now," or "shop the sale" grab attention and guide the user to take the next step.

A/B testing and conversion rate optimisation (CRO)

CRO comes from testing what works best for your audience. Run A/B tests on website elements such as CTAs, headlines, page layouts or colour schemes to see what improves conversions. Small tweaks can make a big difference in driving more sales.

Customer reviews and testimonials

Positive reviews and testimonials build trust with potential customers. Showcase them prominently on your site – people want to see that others had a good experience before committing. Social proof, a situation in which people are influenced by the actions of others, can be the nudge a potential customer needs to go from browsing to buying.

Common challenges when starting an online business and how to overcome them

Here are some challenges you can expect to face while running an online business.

Website downtime and glitches

Technical problems can hurt your business, especially if your site goes down during an important sales period. To minimise the risk of disruption to your site, invest in reliable web hosting and test the site's performance regularly. Use technology such as UptimeRobot to monitor site outages and quickly address issues. If you're not tech-savvy, consider hiring a web developer or using a managed hosting service that handles backend maintenance and security.

Market competition

To stand out from the competition, focus on your unique value proposition. What can you offer that others can't? Whether it's a superior customer experience, exclusive products or an innovative solution to a problem, invest in what makes your brand distinct. Also, consider using niche marketing, in which you target specific audiences with tailored messaging, for higher conversion rates.

Work-life balance

Starting an online business can feel all-consuming. Prevent burnout by setting boundaries from the start: establish your work hours, take regular breaks and schedule time for personal activities. Time management platforms such as Trello or Asana can help you keep tasks organised and prevent overload. If you can, outsource tasks that aren't your core strength to free up mental bandwidth.

How to stay compliant with online business regulations

There are several laws and regulations that govern online businesses. Here are some examples.

Data privacy laws

If you collect customer data, you need to comply with laws such as the General Data Protection Regulation (GDPR) for EU customers and California Consumer Privacy Act (CCPA) for California residents. This includes gaining explicit consent before collecting personal data, outlining clear privacy policies and allowing users to access or delete their data upon request. Use compliance tools such as Termly or OneTrust to ensure you're following all regulations and regularly review and update your data privacy practices as laws evolve.

E-commerce laws and consumer protection

E-commerce laws vary by location and range from sales tax collection laws to consumer protection laws, which mandate transparency on returns, shipping costs and warranties. Clearly display terms of service, refund policies and any additional fees. If you're selling internationally, familiarise yourself with local e-commerce laws in the countries you plan to do business in or use platforms such as Avalara for automated tax compliance across different jurisdictions.

Intellectual property (IP) protection

IP includes your logo, website content, product designs, business name and more. Registering trademarks, copyrights and patents where applicable protects your assets from being copied or misused. For added security, consider using services such as LegalZoom to file trademarks or patents and monitor competitors for potential infringements. Include terms of use on your website to further prevent unauthorised use of your content.

Staying compliant with online business regulations means safeguarding customer data, adhering to regional e-commerce laws and protecting your IP. Keep up-to-date in these areas to ensure your business is operating legally, both locally and globally.

How Stripe Atlas can help

Stripe Atlas sets up your company's legal foundations so you can fundraise, open a bank account and accept payments within two business days from anywhere in the world.

Join 75K+ companies incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You'll choose your company structure, instantly confirm whether your company name is available and add up to four co-founders. You'll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers and then e-sign all your documents. Any co-founders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your EIN. Founders with a US Social Security number, address and mobile phone number are eligible for IRS expedited processing, while others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g. copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at US$100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal Income taxes. Atlas will file it for you – whether you are a US or non-US founder – with USPS Certified Mail and tracking. You'll receive a signed 83(b) election and proof of filing directly in your Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world's leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution and tax compliance.

A free year of Stripe Payments, plus $50K in partner credits and discounts

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance and operations from industry leaders like AWS, Carta and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you'll access additional Stripe benefits, including up to a year of free payment processing for up to $100K in payments volume.

Learn more about how Atlas can help you set up your new business quickly and easily and get started today.