Setting up Payment and Shipping Info
Next comes the best part about running an ecommerce store: getting
paid and sending products to your customers! If your site is run on
an ecommerce platform like Shopify, setting up payment processing
information usually only takes a few clicks. However, depending on the
country you’re in, you may also need to get a business tax ID number.
In the US, this is called an EIN (employer identification number). Some
payment processors require this information before allowing you
to accept payments as a business. Look up the guidelines for your
country (and, where applicable, state/province) to make sure you
have all the information needed to start accepting payments on your
site. Platforms like Shopify will list the information they require to start
accepting payments.
In the United States in particular, payment processors like PayPal are
required to submit records of the payments made through their platform
if the revenue and transactions received hit a specific guideline. Be sure
to set up your business properly with an accountant or tax professional
before launching a store.
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Suggested Vendors
Many ecommerce stores use Stripe, PayPal, Square, and other payment
processors to collect payments from transactions. Which is best for your
site depends on your location and what fees you’re willing to pay. Many
processors will collect a set amount per transaction, like $0.25, as well
as a percentage of the total amount paid, usually from 2 to 5 percent.
There are a few factors to think about when it comes to choosing
a vendor:
Ɉ
Costs
Ɉ
Ease of use for customers and business
Ɉ
Payment processing time
Ɉ
Availability of different options for customers to pay
Ɉ
Countries served (both where customers and the business
are based)
Ɉ
GDPR and other data protection regulation compliance
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Many ecommerce website builders will walk you through this process,
but it doesn’t hurt to do your own research to determine the best option
for your site. Some possible resources to look at to compare credit card
processors include PCMag, MerchantMaverick, and Fundera.
When to Collect Sales Tax
When should ecommerce stores be collecting sales tax from customers?
According to
TurboTax
, the essential rule in the United States is that if
you have a physical store or office in the state the customer is in, then
you need to collect sales tax. If you don’t, then it’s not required. However,
legislation brought in during 2018
sought to remove this exemption and
many tax professionals are expecting businesses to have to charge sales
tax for every customer, no matter where they are located.
Be sure to check the laws in your state and country about sales tax and
follow them accordingly. Not doing so could have major implications for
your business, such as penalties and fines by the IRS or other governing
bodies.
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After orders have been paid for and processed, the fulfillment
component of ecommerce begins – getting the product to the
customer. Depending on the type of product, the fulfillment process
is going to vary. There are a few different ways that ecommerce
businesses get products to customers.
The first is dropshipping: this is where another company fills the
order on behalf of the original company.
Essentially, they act as a fulfillment agent for all orders, and the original
company does not have to do anything besides making sure that the
orders are being properly transmitted to the dropshipping company.
This is often a great option for business owners who don’t want to hold
inventory or spend time filling orders. Of course, there are some caveats,
such as shipping order errors and/or the cost of utilizing a fulfillment
company versus doing it yourself.
Oberlo
is a good resource if you want
to get started in dropshipping (note that it’s connected to Shopify). They
are a dropshipping marketplace that allows you to browse products that
are available for dropshipping to sell in an online store.
Another order fulfillment option is to do everything manually. Many
business owners that are making products themselves or have
handcrafted and manufactured it using their own design and
prototypes will go with this option. They often start out with a small
quantity of inventory and fulfill the orders themselves, choosing to
scale as they grow. As more orders come in, owners will have to start
looking for additional employees and a bigger space to fill orders.
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