Have you ever asked yourself the question “how much does starting an online business cost?” Starting an online business can be a great way to explore your passions, help others solve a problem, commit to a goal, and to even make some money along the way! This article will explore how much it costs to start your own online business. I think you may find that it’s cheaper than you think!
Starting an Online Business Checklist
To start with, I’ve included a general checklist below of all the potential expense items you’ll need to consider when starting an online business. As you can see, we have kept costs low by bootstrapping the business. This means that we are only spending money on items that are essential. Some of the checklist items below may not even apply to you – thus saving you even more.
After this starting an online business checklist, I will go into some details on each item. This will help you decide whether or not you need plan on this expense when you start your own business.
Starting an Online Business Expense Checklist
- Register your business officially as a corporation or LLC – $215 ($50-$100 annually after this)
- Website hosting – $150 (for 3-years)
- Website domain registration – $15
- Setup a Registered Agent for your business – $40 (annually)
Total one-time startup costs = $420
As you can see, it will take just a bit of money to get your online business up and running. Now, let’s look into each item in detail to determine if it will be necessary for you.
Register Your Online Business as an LLC
I recommend that all small businesses form and LLC vs. a sole proprietorship or a corporation. Learn more about the differences in this post here: How to Start and Setup an LLC. This post gives you the background on why you want an LLC for your business and how an LLC is much more hassle-free than a corporation (INC).
Now that you are convinced that an LLC is the way to go for your online business, go form one now by following my video here: Start and Setup an LLC on-line in Less than 6 Minutes! If you follow the advice I give you in the video, you can get the bare-bones options for your LLC for ~$215. You can easily pay $500-$600 for this if you elect to get all the “junky” options that firms try and bundle with a LLC registration, but they are really unnecessary.
Website Hosting for Your Online Business
This one is a no-brainer. If you are running an online business, then you will definitely need a website! You will need to perform two actions to get your website up and running: 1) register for hosting, and 2) purchase a domain (more on that later). A hosting plan is basically like an internet hard-drive that will store your website’s files. You will need this in addition to a dot-com name to make your online business website work.
The best and cheapest option to obtain quality website hosting is to purchase a hosting plan through Bluehost. Check out my post here on how to do this: How to Setup a Blog for Fun or Profit. If you pre-purchase your online business website hosting for 3 years, you end up paying just about $4 per month for a total of $150. If cash is tight, you can always go for a shorter term website hosting contract…
Getting a Domain for Your Online Business
OK – now that you’ve setup your website hosting through Bluehost, it’s time to purchase a domain. A domain is the same thing as a dot com website. This usually will come for free when you buy a hosting package, but not necessarily. If you setup your hosting package through Bluehost, then they give you the domain of your choice for free for a year. If not, then I really like using 1and1.com as they can frequently have free domains for new customers for the first year.
Setting Up a Registered Agent for Your Online Business
If you are asking yourself: “how much does an online business cost?” We have covered most of the mandatory expenses so far. All states will require that you have a registered agent setup for your business. A registered agent is someone that will receive mail and official communications for your business. You can either elect to do this yourself, or hire an outside firm to receive your “official” mail. It is important to have a registered agent for your online business in case the state corporation commission is trying to get in touch with you or someone wants to sue your company.
If you registered your LLC in the state that you live, you can use your own home address or setup a PO box to receive these. If you setup your LLC in a state that you do not live, then you will have to pay for a registered agent service. Don’t worry! These only really cost $40 a year. The company will receive official mail on your behalf, scan in a copy of it, and email you with the details. It really couldn’t be easier :-).
Because my LLC is setup in Virginia but I live in Georgia, I am forced to use a registered agent service. So far, I have used Registered Agents Inc for my registered agent service and they have been great. They are basically the cheapest I could find and I have not had any issues with them so far.
Other Miscellaneous Expenses for Starting an Online Business
There are a couple of other small fees/expenses that come to mind when starting your online business that may be applicable to you. The first is a business license. Visit your local county website to determine if you will be required to purchase a business license. It really depends on the type of online business you will be operating as to whether or not you will have to arrange for this.
Another optional expense that some folks recommend when starting an online businesses is obtaining the services of a graphic designer. A graphic designer can help to create a professional logo for your online business. If you do not have graphic designing skills, then this sort of thing is best left up to the professionals. If you are really trying to start your business on a budget, you can always wing it for the first couple of months or find a friend that can take care of this for you.
How Much Does Starting an Online Business Cost? – Final Thoughts
As you can see, it is possible to start a legitimate online business for less than $400 if you plan ahead and really streamline your expenses! I would highly recommend that if you are planning to start an online presence that will make money you take the extra time and expense to form an LLC. This will really protect your assets if someone decides to get lawyer happy with you. If you will be conducting business with other firms, it will also make you seem much more professional!
Good luck starting your online business! If you have any questions, please leave them in the comment section below.