When Does A Small Online Store Become A Tangible Business?
Not everyone who sells items on Etsy or eBay (and sites like them) will necessarily have a business. They might just register as a sole trader or self-employed, or even just declare their additional income to the tax authorities as money earned from a side hobby or hustle, but still part of their personal tax return.
But what if your store becomes more popular than you had anticipated? What if you’re dedicating more and more time to it outside of your usual job? When should you make that transition to a full-time gig, and should you in the first place?
Moreover, when does a small online store become a tangible business? It’s not always clear to say or see, because these plans and this modest success may not have come to mind. So, what does that mean in practice? Let’s consider that, below:
When You Wish To Protect Liabilities
Right now, if you’re just operating as a sole trader, your personal assets, like your house or savings, could technically be on the line if something goes wrong with the store. No one likes thinking about worst-case scenarios, but if things take a bad turn (like a customer lawsuit or unexpected debt), you don’t want your personal items caught up in that mess. If you implement easy EIN filing for new businesses, you can contain those liabilities. If you’re selling to many more people, that can be worthwhile.
When You Wish To Brand Further & Scale
If you’re earning a healthy amount, you may wish to expand a touch. Perhaps you’re thinking about expanding your product lines or trying a new one, improving your branding, or investing in some paid advertising to attract more customers (that’s smart!). If you’re ready to scale up, then staying as a simple side hustle probably won’t be enough, and having a business to invest in can be more tangible, keeping your financial approach well-curated.
When You Consider Taking The Business From The Dedicated Platform
Platforms like Etsy and eBay are great starting points because they give you a built-in audience and handle a lot of the backend responsibilities. But at some point, you might want to branch out into your own website. There you might be thinking of listing your products on other places like Amazon or Shopify. You can still use these platforms of course, but perhaps you’re not just contained to one or would like freedom outside of that. Business registration is wise in those circumstances.
When Your Income Reaches A Certain Level
If your store is starting to bring in enough cash to match (or maybe even surpass) your usual job, then it might be time to think about going all-in. It’s not always an easy decision to make, especially if you’re used to the steady income from your day job, and securing your own clients or customers isn’t always reliable from month to month depending on what you sell (such as seasonal items). But if you can match that, then it’s a good indication to take this process more seriously.
With this advice, we hope you can more easily make the distinction between a small online store and a tangible enterprise, however modest.
*This is a collaborative post.
