Step 1: Decide how you want to sell online

Think about your business idea and decide how you want to sell your product or service online.

Will you set up your own website, use a reseller platform like Amazon or Ebay, or a mixture of online sales and offline sales? You should think about what your target audience expects from your site. You should ensure you can meet your customers expectations.

There is huge potential for entrepreneurs to start an online e-commerce business. E-commerce revenue represents 10.7% of U.S. retail sales with Amazon being the world’s largest retailer.

However, this can be daunting for new online businesses because you may be trying to tap an already saturated market.

Do research on your target market, unique selling point and consider using online software. These will all help you set up an e-commerce site quickly and easily.

Shopify and Squarespace offer templates for new online businesses. Think about the importance of writing a business plan and if it is worth writing one for your online business. There are many different ways to sell online so it’s worth doing your research on what option is best for you.

There are also accounting requirements you should think about, such as how should you set up your online business or how to charge VAT?

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Examples of online businesses

Starting an online business has been made easier by dropshipping fulfillment methods. It cuts out costs of warehouses, can provide flexibility on where you work and it’s an attractive way to test your new business.

What is dropshipping?

Dropshipping is attractive for new online businesses.

You don’t need to invest a lot of money in inventory straight away and it’s quick to get started. The dropshipping model allows your customers to place orders on your site and it automatically sends the order to your dropshipping supplier.

Your dropshipping supplier then prepares and delivers the order straight to your customer.

For example, dropshipping supplier Oberlo integrates with Shopify. It allows online business owners to use this software to find products online and add them directly to your Shopify store. They will then take care of your inventory, packaging, and shipment.

In the beginning, you may consider this type of online business at the same time as working a full-time job. But it’s important to understand that this is another source of income.

Therefore you are self-employed as well as being a PAYE employee. If you sell online, you need to register for tax and prepare tax returns each year.

Fulfillment by Amazon (FBA)

This is another type of dropshipping fulfillment method but it allows online businesses to sell their own products on Amazon.

Business owners send all or some of their inventory to one of Amazon’s fulfillment centres around the world and Amazon stores your product. When a customer buys your product, Amazon picks, packs and ships your product to your customer.

Amazon also has a customer service center that will look after your customers and process any returns for you.

Speak to our Client Services Team about what services you need to start an online business. We are always happy to talk you through your obligations when you are working as an employee and starting a business on the side.

Differences between using a dropshipping supplier and Fulfillment by Amazon

Dropshipping supplier

  • Build your own website so you have more creativity
  • You don’t own any of the inventory
  • You look after your customer's onsite experience, checkout, and returns

Fulfilment by Amazon

  • Sell on Amazon, therefore, you get their brand recognition
  • You may hold some of your own inventory
  • Amazon has a customer service centre that looks after your customers and processes returns for you

Step 2: Sole Trader or Limited Company

Starting an online business means you need to official register it with the Irish Revenue Commission (Revenue) or the Companies Registration Office (CRO).

Decide what business structure you want to be – Sole Trader or Limited Company. There are advantages and disadvantages to both business types and it is your personal choice which one to choose.

In general, Sole Traders take on more risk than Limited Companies. Sole Traders are personally liable for the debts of the business therefore you may need to sell off personal assets to repay debts. As mentioned, the business owner doesn’t hold any inventory in dropshipping online businesses so this may provide less risk for you.

On the other hand, setting up a Limited Company may be the right option because the registration process creates a separate legal entity. If you want to sell your own products online, operate online and office or offer services online, you may choose to incorporate your online business.

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In many cases, online businesses start off as Sole Traders but as the business grows, you can consider switching to a Limited Company.

Speaking to our professional Client Services Team will help you make the decision between Sole Trader or Limited Company. Feel free to contact us and we are always happy to help you with your questions.

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How to register your online business in Ireland?

1. Register with the Companies Registration Office (CRO)

The first step to setting up an online business in Ireland is to register your business with the correct authority. You need to register with the Companies Registration Office (CRO) if you want to incorporate a company. Sole Traders only need to register with the CRO if you want to register a business name.

We can look after all this for you with our Company Formation service. You provide us with information about your new online company and we prepare the paperwork (form A1 and Consitution).

Follow Our Limited Company Checklist

2. Register with Irish Revenue

Both Sole Traders and Limited Companies need to pay tax so it's important you register for tax before you start selling online. Sole Traders register as self-employed and Limited Companies register for tax with Revenue.

The amount of tax you pay depends on the size and type of your business and what sector you belong to. So each business may require different tax registrations. You should always seek accountants' advice to ensure you comply with your obligations as an online business.

Find Out What Taxes To Register For

3. Set up a business bank account

It's wise to set up a bank account for your online business transactions. Bookkeeping will be easier and therefore preparing financial statements will be more efficient.

Sole Traders don't need to prepare financial statements. But, similar to companies, they do need to keep clear records in case of a Revenue audit. It's also important to keep track of your expenses so you can claim them against your tax liability.

There are many different banks so be informed about the best banks in Ireland.

Learn More About Banks In Ireland

Step 3: Build your brand, website and social media presence

Starting an online business means you need an online presence to stand out from your competitors. There are many different agencies and consultancies you can use to help you build your brand if you don’t have experience. Website design, search engine optimisation, branding, digital marketing and user experience are all areas you can hire experts in.

Step 4: Focus on your analytics

There are many ways you can track the success of your online business using softwares such as Google Analytics. Visitors, conversions, and average order value per customer are all interesting statistics that can help you understand your business. If you’re using an online e-commerce site like Shopify, it has reports on its platform. Google Analytics also offer online courses if you want to learn how to analyse your online business.

Step 5: Set up your taxes properly

As a business owner, you need to ensure your business is tax registered. Sole Traders need to register for Income Tax (IT) and Limited Companies need to register for Corporation Tax. This needs to be done before your business starts to invoice clients.

Other taxes you need to consider registering for include: Value Added Tax (VAT) and Pay As You Earn (PAYE).

If you are moving goods or services inside and outside of the EU, there are different rules that apply. Accounting terms such as “reverse-charge VAT”, “zero-rated”, “VIES” and “intrastat” will be used alot if your company deals with EU and international VAT.

Check out our full guide on how to charge VAT.

Speak to our Client Services Team if you are considering starting an online business in Ireland. Our team can advise the best services to help you get your business started.

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Step 6: Know what expenses you can claim

Business expenses can be used to reduce the amount of tax you pay at the end of the year.

The expenses you claim must be wholly and exclusively for the purpose of the business so its important you know which expenses qualify.

If you are working from a home office, there are a number of expenses you can claim.

You should ensure that you are keeping track of all your expenses so you don’t overpay on your tax bill. Using online accounting software will greatly help you reduce administration time of recording and maintaining business records.

We offer free Premium subsciption to Xero accounting software for all our accountancy clients. Get in touch with our Client Services Team to discuss outsourcing your accounting.

Ready to set up your online business?

If you’re ready to take the next step to set up your online business, get in touch with our Client Sevices Team. We can talk you through what you need to do to register with the appropriate authorities.

Ensure you get set up correctly with our Company Formation Service.

We take care of everything you need so you have time to focus on getting your website, suppliers and analytics in order for our online business.

If you have queries about how an online business operates, let us know how we can help you.

Call us on +353 (1) 905 9364 or email hello@accountantonline.ie.

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