While it's fresh in memory I wanted to share what I've learned these past few weeks setting up my online shop. There's a whole lot of steps involved and it took quite a bit of research to find out what to do, like what permits and licenses do I need and where to get them? Where should I setup my shop? How do I create the images for the store, set up shipping and taxes? I would have really loved to have answers to all these questions in one place! If that can help anyone wanting to open a shop, I put every step I went through here in this post.
1. Setting up the business
Etsy forums are a great resource with many sellers sharing knowledge, and it's nice that a lot of discussion focus on California (if that's the state you live in!), and this thread was helpful for me to understand if I needed permits of not. But there was still a lot of confusion regarding which one to get and in what order. The most useful and clear answers came from the video below, outlining the steps for starting a business one by one. The steps I retained as necessary to start an online shop were: the Employer Identification Number, register the trade name (DBA), get the business license, seller's permit, open a business bank account, and set up an accounting spreadsheet.
The Employer Identification Number (EIN) is easy to get, you do it online and it just takes a couple minutes. Here's the link, go to the bottom and click "Apply Online Now".
Registering your business requires filing a DBA (Doing Business As) with your local Business Name Filing and Registration office. In California the DBA has to be published in a paper for 4 weeks so there are newspapers who will offer doing the filing and publishing for you for a fee. But after going through a local paper I would advise to file yourself at the office and then you'll get offers in the mail shortly after for the publishing part. At least you'll have the name right away and with that you'll be able to get the business license and seller's permit. The local paper I used to do the filing, the Van Nuys News Press, didn't file until a whole month after I called in to check about it, because they went on vacation (for a month??) and just forgot about it I guess.
Once you have the DBA the business license is very easy to get. I went to my local Office of Finance, Permit & Tax Division and got it on the spot.
When calling my local State Board of Equalization office for the seller's permit, I was told it was best to file it online. For California the website is http://boe.ca.gov, and the direct link to the permit application is here, then click on "Register a Business Activity with BOE". There are a couple weird questions in the application like entering credit card processors and suppliers. For most of us doing business online it's Paypal, or Stripe (on Squarespace). The suppliers are the places where you buy supplies to make your art in your state (art store, staples, etc). When you register them you can buy from them without having the pay the retail tax.
One other tip I picked up from an Etsy forum thread is an advice to have a separate phone number for the business because once you put it on the seller's permit application you'll likely be receiving a lot of spam calls. You can get a number on Skype for something like 5 bucks a month, I think I got mine for 24 bucks for the whole year, they must have had a special going on.
The business bank account is something else I spent a lot of time researching. Large banks can charge a lot of fees and set a minimum balance which are not friendly to beginning small businesses. After reading articles like this one from Money.com I considered online banking but I like to have the convenience of a physical location, with checks and the possibility to deposit cash (like when making local sales at a fair).
I found a recommendation for California Credit Union on a freelancer's union site, and it looked like a really good choice. Low fees and no minimum balance, a branch close by, and very good reviews on yelp. Note (12/12/14): Unfortunately, I have to retract what I said. I opened the account and trusted that everything was right, but more than a week later, I still had no online access, and the account/routing numbers were not even valid for use. Not a very good start! After several calls I decided I don't want to have to deal with slow and unresponsive service , so I went in to close to account. They didn't even bat an eyelash, it was like "ok, fine, go the counter and we'll close it for you." That's how much they cared, wow. Glad to move on! After this I may even consider big banks like Bank of America or Chase!
Lastly, the accounting spreadsheet. If you're on a Mac and you don't have Excel on your computer, like me, you can use Numbers from Apple, it's now free with the latest OS. Also, I like to use Mint to track expenses and transactions, it's free and easy to use.
2. Setting up the online shop
Etsy has been the de facto place for setting an online shop for a while, but with so many sellers there now I hear it can be hard to be found in search results or get any kind of traffic. I wondered, are there better options today? Here's a very good article to help you think about your options. With this advice I decided to setup shop on my Squarespace site but also have a presence on Etsy (not opened yet, but I'll do it soon!).
On Etsy, if you need inspiration when naming your shop, here's a useful forum thread to get you thinking about it: https://www.etsy.com/teams/7722/discussions/discuss/10999515/
One of the most important thing for your shop are the images for your products. I've tried photographing my prints before, it's not easy and a lot of work! The lighting conditions in my place are poor and it takes time to figure out a good setup. A better solution I've found (at least until I move or find a way to improve lighting in my place) is to use mockups from the web, in particular frame mockups. There are lots of free options with a simple search on Google, and you can also purchase cheap licenses from sites like CreativeMarket and GraphicRiver. For my shop I used two free mockups, this frame and that poster from bluemonkeylab, and I bought one license on GraphicRiver. If you're savvy in photoshop you can modify the files to be more personalized to your shop: adjust brightness and shadows, change the thickness of the frame, the background, and even add textures to make your frame appear to be made of wood or gold.
Next after the images, you need to describe your items and set the prices. It's important to list dimensions, materials, if it's archival, things like that. There's no ready recipe for this, and my advice here is to look at examples of similar products on established shops you like for inspiration. The price should be at minimum your cost x2. There too, it's good to shop around and compare to find reasonable prices to begin with.
Setting shipping options can be quite tedious. Some people set a flat fee, other do it by weight. It's a tough choice. Setting a flat fee you end up charging more for some people, less for others, and I think it sucks for people who are charged more. So I prefer to use weights. I bought a postal scale and weighted up to 4 items together for each type of my prints to get an idea of the possible weights I could get in an order. For prices (US, Canada, Mexico, Europe and Asia regions) I found this very useful page that lists every possible options and explains when to use what: http://www.nerdylorrin.net/jerry/postages/. If you ship your art in rigid photo mailers you'll have to ship with the parcels rate (which is twice as much as the letter rate). I'm going to test printing my labels directly from the USPS site. There's also a direct link from Jerry's page to print labels with your Paypal account.
When getting an order from an international address it can be hard to determine what is the city, state, zip with a foreign language address. Here's a link that will help with that. With my first order, I found out the apartment number was missing and was able to contact the buyer and ship to the correct address. Good thing I checked!
Are you still with me? That is a long post with a lot of text, I'm sorry! Just a few more things :)
After the shipping you'll need to set up the tax rules. You don't need to collect taxes from your buyers who live in other states or internationally, but you do have to collect and report taxes for buyers that live in your state (here's a link about taxes in different states). In California the rule is a bit complicated. There are different rates for different counties. What I've found here is you have to charge the rate of your district to people that live in the same as yours and a flat rate for everywhere else. So for Los Angeles customers the rate is 9% and everywhere else it's 7.5%.
Now you're ready to connect your shop with payment options. On Squarespace it's done through Stripe, and on Etsy you can use Paypal or collect credit cards with Direct Checkout. In all cases you have to link to your bank account, which is another good reason for getting a business account. Until I can open mine I hooked up my personal one, but will update it as soon as I have it.
Ok, it's time to launch your shop!! Do you want to setup a special coupon for your followers? Here's some advice on store coupons. I created a coupon with a 20% discount for one month to share with all my followers.
But that's not all, how are people going to find your shop?? To finish this long list of tips, here are a couple inspiring articles with yet may more tips for your marketing strategy: http://www.launchgrowjoy.com/5-tips-to-market-your-etsy-store/ and http://www.launchgrowjoy.com/5-tips-to-market-your-etsy-store/. These are written with Etsy in mind, but I think they can apply to any shop, whether it's on Etsy, Squarespace, or anywhere else.
Good luck with your new shop!