How to Launch a New York City-based E-Commerce Business

Starting an online business in a high-traffic market like New York City’s can be very rewarding. But before you jump in, you need to know about the laws, rules, and regulations relevant to your business. New York runs tight business and e-commerce laws, and without adequate research, you might find yourself in trouble before you start generating profits. That’s why you should familiarize yourself with e-commerce’s primary rules, so you don’t end up breaking the law.

What is an E-Commerce Store?

An e-commerce store is any business that sells products or services via the internet, through a website. Such websites include eBay, Amazon, or any independent e-commerce website. “Rented Platforms” like eBay, Amazon, etc., generally charge a commission for every product or service sold through their platform. Still, you won’t have to worry much about New York-based business licenses and laws.

On the flip side, an independent e-commerce website or an “owned platform” will grant you absolute ownership over your e-commerce business but will require you to register the same and obtain the requisite licenses for the products or services that you wish to sell.

Choose the Right Licenses and Permits

NYC laws require you to obtain different licenses and permits depending on if you’re selling goods or providing services. Those licenses will also depend upon the type of product you wish to sell, such as stationery items, guns, or alcohol. Specific categories of products like weapons and alcoholic drinks will also require you to obtain a federal license and permits.

To obtain federal permits and licenses, you can contact the New York State Department of State Division of Licensing Services. In contrast, the New York City Department of Consumer Affairs grants local permits and licenses for NYC. If it’s all too confusing, NYC offers a 10-minute survey that you can take to help you determine which licenses or permits you’ll require before you start your e-commerce business. It’s also essential your business remains in compliance with your receipt or license. Failure to do so may result in hefty penalties and even a complete shutdown of your business by the local or federal government.

Register Your Business

Online businesses need registration the same as a brick storefront. You can contact the New York Better Business Bureau for information about how to register your business, including whether it counts as a sole proprietorship or limited liability company (LLC) since the formalities differ for each.

If you operate your business as a sole proprietor, you’d have to report your net business income on your personal income tax. Hence, the Internal Revenue Service will treat you and your business as one and consider your business earnings as your personal income. On the other hand, an LLC combines a corporation’s characteristics with that of a sole proprietorship. If you register your business as an LLC, you will not be personally liable for its debts.

Sole proprietorships are much easier to form, and you’d only need to register with the local governing bodies. To register your business as anything other than a sole proprietorship, you’ll need to register with the New York Secretary of State.

Get an Employer ID Number (EIN)

You need an employer ID in order to pay taxes and become a legalized business. You’ll need to file the SS-4 form with the IRS to obtain an employer ID number. However, if you registered as a multi-level LLC, you’ll also require a federal ID number. EINs are not subject to expiry and are unique to every business. Finally, if you are operating your business under a name other than yours, you will need a business certificate or a fictitious name certificate.

Set Up Payment Options

Once you’re legally an e-commerce business, make sure your online payment systems function correctly before you start getting customers. A broken payment gateway will significantly delay your conversion rates and result in a loss of customer trust.

You should always keep multiple options active and ensure that they work on both desktop and mobile devices. If you opt for payment gateways like Shopify, PayPal, Amazon, or any other services, ensure proper integration and full functionality.

Build Your Brand and Marketing

Finally, when you’re ready to open your digital storefront, start building your brand, website, and marketing plans. Your brand is your business’s unique identifying trait that your target customers will identify. After you build your brand, your marketing operations, and your business website will advertise it to your target market base and help create brand recognition.

Both branding and marketing are crucial to your business’s success. You may want to consider hiring a dedicated marketing agency or find help with e-commerce web design in NYC that will help your company improve its brand awareness to your target audience.

Straightforward, but Highly Profitable

Starting an e-commerce business, especially as a sole proprietorship in NYC, is relatively simple and can generate a large Return on Investment. A recent survey by the US Government showed that e-commerce sales generated net revenue of $200.7 billion for the second quarter of 2020, increasing by 44.4 percent since 2019, thus solidifying the rising trend of e-commerce in the US. Following these simple tips, you, too, can carve a slice of this multi-billion dollar pie without landing yourself into trouble with the authorities.