This is not the exciting part. Nobody posts about filing an LLC or opening a business bank account. But this is the work that separates real businesses from expensive hobbies. I will walk you through every step so you can do it all today and never worry about it again.
"I know this page feels like eating your vegetables. But every single person I have watched fail at online business skipped this part. They earned money, spent it all, got a surprise tax bill, and quit. That is not going to be you. Do this once, do it right, and you never have to think about it again."
Depending on the path you chose, some sections on this page are required right now and some can wait. Here is your quick guide so you do not waste time on things you do not need yet.
You may not need an LLC or Shopify right away. Focus on the EIN, business bank account, and tax sections. You can come back for the rest when you are ready and your revenue justifies it.
You need everything on this page before you launch. Business structure, EIN, bank account, taxes, and payment processing. Do not skip any of it. Complete this page today.
Focus on EIN, payment processing, and the tax sections. Your platform setup (Gumroad, Etsy, Stan Store) is covered on the Build page. Come back for the LLC section when you are consistently earning.
You have two options when you are starting out. Neither one is wrong. The right choice depends on where you are right now and how much revenue you are generating. Let me break down both so you can make a clear decision.
| State | LLC Filing Cost | Annual Fee | Notes |
|---|---|---|---|
| New Mexico | $50 | $0 | Cheapest total cost, strong privacy protections |
| Montana | $70 | $20 | Low cost, no sales tax |
| Wyoming | $100 | $60 | No state income tax, best overall value |
| California | $70 | $800 | $800 minimum franchise tax every year — avoid if possible |
| Massachusetts | $500 | $500 | One of the most expensive states for LLCs |
Start as a sole proprietor if you are earning under $1,000 per month. File your LLC when you are consistently earning above that. You can form an LLC in any state regardless of where you live — you will just need a registered agent in that state ($50 to $150 per year). Do not let this decision stop you from starting. The paperwork can come later. The work cannot.
"I spent two weeks researching LLC formation before I made my first dollar. That was two weeks of zero revenue. Get your EIN, open your bank account, and start building. The LLC can come when you have income worth protecting. Do not let paperwork become your excuse."
An EIN is an Employer Identification Number. Think of it as a Social Security Number for your business. It is completely free, takes about 5 minutes, and you receive it instantly. There is no reason not to do this today.
This is free and takes 5 minutes. There is genuinely no reason to wait. Get your EIN right now while you are thinking about it. You will need it for your business bank account in the next section, and you will need it every tax season. Open a new tab, go to IRS.gov, and get it done.
This is one of the most important things you will do as a business owner, and it takes less than 30 minutes. Separating your business money from your personal money makes taxes infinitely easier, looks professional to customers and partners, and legally protects you if you have an LLC.
Mixing personal and business money is the number one mistake new business owners make. It creates a tax nightmare, voids your LLC protection, and makes it impossible to track your actual profit. Open that separate bank account before you make your first dollar. Not after your first $1,000 — before your first dollar.
"Opening my business bank account was the moment it started feeling real. It took 10 minutes on Mercury. Every dollar my business earned went into that account, and every dollar I spent came out of it. When tax season came, my accountant said I was the most organized first-year client she had ever worked with. That was not because I am organized — it was because I separated my money from Day 1."
I am putting this section here because I do not want you to be the person who has a breakout month, spends everything celebrating, and then gets destroyed by a tax bill you did not see coming. Read this before you earn your first dollar and you will never be caught off guard.
Every dollar you deduct reduces your taxable income. Keep receipts and records for everything on this list.
If you sell physical products, you must collect sales tax in states where you have "economic nexus" — usually $100,000 in sales or 200 transactions in a given state. Shopify's auto-tax feature handles the calculation automatically. You still need to register and file in each state where you have nexus. TaxJar or Avalara can automate this process when you scale. For most beginners, this will not apply until you are doing significant volume.
Affiliate networks, payment processors, and platforms will send you a 1099 form if you earn over $600 from them in a calendar year. This means the IRS already knows you earned that money. Report ALL income on your tax return even if you do not receive a 1099. Unreported income is one of the most common audit triggers.
I am not a tax professional and this is not tax advice. These are the basics every business owner should know. When you are consistently earning $2,000 or more per month, hire a CPA (Certified Public Accountant). A good accountant pays for themselves in deductions you would miss on your own. Until then, follow the 30% rule, keep receipts for everything, and pay your quarterly estimates on time.
"The 30% rule genuinely saved me. I set up a separate savings account on Day 1, and when my first quarterly payment came due, the money was just sitting there. It felt like a superpower. Meanwhile, people in my niche were panicking about tax bills they could not afford. Do this one thing and you are already ahead of 90% of new business owners."
Understanding how money flows into your business — and what can go wrong — is something you want to get right from the start. Here is everything you need to know about accepting payments, the fees involved, and how to actually get that money into your bank account.
| Processor | Fee Per Transaction | Monthly Fee | Best For |
|---|---|---|---|
| Shopify Payments | 2.6% + $0.30 | $0 (included with Shopify) | Shopify store owners — eliminates extra transaction fees |
| PayPal | 2.99% + $0.49 | $0 | Secondary option — 20-30% of shoppers prefer PayPal checkout |
| Stripe | 2.9% + $0.30 | $0 | Powers Gumroad, Stan Store, and many other platforms |
If your sales spike suddenly or your chargeback rate increases, payment processors like Stripe and PayPal may hold your funds for review. This can last days or weeks. Prevention: scale your sales gradually instead of going from zero to thousands overnight. Process refunds promptly before customers file chargebacks. Keep detailed records of every transaction, and always send tracking numbers the moment an order ships. If a hold happens, contact support immediately and provide all requested documentation. It is not the end of the world, but it is stressful — and it is preventable.
"The payments section might feel like overkill, but I watched someone in my niche have $14,000 frozen by Stripe because they went from zero to viral overnight with no transaction history. Setting this up correctly and scaling gradually takes a little patience — but recovering from a payment processor hold takes months."