Hi there! So glad you’re here! Grab a notebook, a pen, a coffee, a tea, some cookies, some hot cheetos if you don't have a sweet tooth like me, because this is going to be a long one and today is the day you finally take the leap to opening your online boutique!
You’re here because you’ve been dreaming of opening your very own online boutique and have no idea how to get started. You keep saying tomorrow is the day you start, but you always put it off because it all just gets you so overwhelmed! You need help and clarity but don’t know where to look. Well I’m here to show you step-by-step the things I did to open my boutique 7 months ago, and believe me you’ll be asking yourself why you didn’t start sooner! It might seem overwhelming at first, but you can get through it! Remember that nothing will ever happen if you don’t take action! Today we will only be going over the boring, legal stuff, so let’s get it out of the way.
First things first! The three most important things before we get to the fun part and you go off and spend hundreds on inventory is to decide under what business type you will operate (i.g., sole proprietorship, LLC, S Corp, C Corp), write up a business plan, and research and decide on your boutique name.
Business Type - What’s the difference and which one should I choose? The two most common types if you’re the only owner is a sole proprietorship or an LLC. A sole proprietor is one person who is the exclusive owner of a business and no one else. You and and your business are seen as ONE, without any distinction between the two. An LLC is a corporation that can pass as a corporation or a sole proprietor.
Ok, but what does this mean? In the most basic terms, if you will be the only owner of your boutique, you can choose to go either way. The biggest difference is that with a sole proprietorship you are PERSONALLY liable for any debts, or in the event that you get sued, meaning the money could be taken from your personal assets. Also, your taxes would be filed along with your individual income tax return.
If you choose to be an LLC as a sole proprietor, ONLY the business would be liable and your personal assets would be protected. You would also report your profits and losses on your personal tax returns. If there’s more than one business owner, then it would be a multi-member LLC. Then you have your S corps and C corps, but I won’t go into details with these two because I’m not a professional, and there’s a lot of tax information that I am not familiar with. In any case, my best advice would be that you talk to an accountant or a tax professional who can guide you.
If you’re just starting out and you’re the sole owner, the easiest thing would be to file as a Sole Proprietorship, which is how I’m currently operating my business, as you can always change it later on.
Business Plan - Now I know what you’re thinking, ugh why do I need a business plan? Everyone talks about business plans, I just want to start selling!...Because without it you risk making the same mistakes many of us have already made. Don’t get me wrong, you WILL make mistakes along the road and you will learn from them, but if you can take action steps to try and lessen the hit, WHY NOT?
A business plan is your map to how you will run your business and achieve your goals. Ask yourself this, why do we plan anything? So that we’re PREPARED, so that we know what our objectives are, and most importantly so that we don’t blindly waste our money. Not saying it won’t happen with a business plan, but I can’t stress this enough because I made the mistake of starting without a plan (I didn’t even know what that was), without a clear vision of who my customer was, and before I knew it I was stuck with hundreds of dollars in inventory that I didn’t love and I couldn’t sell. DON’T BE ME. Business plans don’t have to be ten pages long, nor do you have to stay up all night and break your head over it. I’ve provided a worksheet to make it easy for you! Click below to get your download of your Online Boutique Business Plan. I will go more in depth on the plan in a future blog post!
Boutique Name - So you’ve got your plan down, time to choose your boutique name! It’s important to come up with something you absolutely love because this is what will make your brand and your shop stand out from the rest. This is one of the reasons having a plan is always a good idea. Understanding who your customer is, your style, your boutique’s purpose, will help you come up with a name that resonates with all of that. Now it’s ok if later you decide you don’t like your name anymore and maybe you want to re brand, but we don’t want you changing it every 6 months either! I didn’t give much thought to my name, to be honest with you, and maybe in the future I’ll decide to change it but I want to make sure I have my set customer base in place who will follow me whether I’m Tealight Boutique today or something else in the long run.
You also want to make sure the domain name you want is available. You can try searching for the domain name you want using the link below. Keep in mind that your business name and domain name does not necessarily need to be the same. The domain name is your website’s address where your customers will locate you on the internet. For example, your business name could be “Lovely Fashion Boutique” and your domain name could be shoplovelyfashion.com.
Search Domain Name
So you’ve got your business type, your business plan, and your boutique name. Let’s bring it to LIFE! I will primarily be focusing on an online boutique based in Texas and there’s good news and bad news. The good news, is that believe it or not, in Texas, you are not required to get a “general” business license or a specific license for an e-commerce store. So YAY! However, the bad news, if you are operating your business out of your home you may need to get a Home Occupation Permit depending on your county’s zoning laws. Make sure to check with your county’s office if that permit is required in your area. Other states might require you to register for a business license, so please check with your state.
DBA (Doing Business As) - One thing I rarely see being mentioned is getting a DBA. DBAs were “created as a form of consumer protection, to prevent unscrupulous business owners from operating under a different name to avoid legal trouble”. It also allows companies, LLCs, to operate multiple businesses without having to create separate entities. For example, PepsiCo is the parent company of many other brands. You may choose to come up with a general business name if you think you might decide to have several different businesses in the future besides your boutique.
In my case, I hadn’t even thought of opening a boutique when I first got my sales tax permit. I was doing re-selling at the time and I applied for the permit under the business name “Tea Light”. Then when I decided to open a boutique, I filed a DBA under the name “Tealight Boutique”. Now if one day I decide to open another business, I would file another DBA, but they would all be under my main company Tea Light.
A DBA will also be required when you open your business checking account. There are some sole proprietors who use their own name as their business name, in that case they wouldn’t need a DBA. However, you’re probably not going to name your boutique the same as you, therefore you would need to get one. To apply for a DBA visit your local county clerk’s office. I paid $30 for mine.
Sales Tax Permit - Next you’ll need to apply for your sales tax permit. You will need to charge sales tax for your products depending on the nexus of your business. Nexus means there is a presence of your business in that state. For this example, if you have an office or you operate from your home in Texas, you have nexus in Texas so you would need to charge sales tax to all of your customers from Texas. Note: Starting October 2019, remote sellers in Texas who’s revenue exceeds $500,000 in the preceding 12 calendar months will need to collect sales tax on all remote sales. You do not need to worry about this now, but it’s good to know because Texas Legislature is considering having a single sales tax rate for this.
How much tax do I need to charge? Texas is an origin-based sales tax state, which means you would charge sales tax based on the rate of your location, as long as your business is based in Texas. I live in El Paso, TX, where our tax rate is 8.25%, therefore I would charge 8.25% to all of my Texas customers.
GET EXCITED! WE’VE ARRIVED TO THE FINAL REQUIREMENT.
EIN - An EIN is an employer identification number or a federal tax ID number that is assigned by the IRS to identify your business come income tax time. Applying for an EIN is quick and easy, but you don’t need to get one if your business is a sole proprietorship. You would simply use your SSN on your tax return form in place of the EIN. Same goes if you are a ‘sole proprietor LLC’. If you have employees then you would definitely need one. So at this point if it’s just you operating the business then getting an EIN would be optional.
You made it! Give yourself a round of applause if you were able to read this far without sweating. I get you! I didn’t really have anyone to guide me, so I’ve written this guide because I really want to help make this as painless as possible for you. You will learn as you go, all you need to do is START. Make sure to get your business plan worksheet and your part I checklist by clicking on the link below!
Part 2 will drop next week, so make sure you subscribe so you don’t miss it, and you won’t want to! I will be covering domains, bank accounts, e-commerce sites, and all those fun things so you can FINALLY start selling! Keep on going, and see you next week!
Be afraid and do it anyway.
Karina with a K
Personal IG: @_karinagal