Starting an e-commerce business takes six steps: pick a product with proven demand, register a legal entity and get an EIN, choose a selling platform, set up sales tax collection, build the store, and drive traffic. Expect $500 to $5,000 to launch, and three to six months before revenue is steady.
Key Takeaways
- An EIN is free and instant from the IRS. Anyone charging you for one is selling you nothing.
- Since the 2018 South Dakota v. Wayfair ruling, you can owe sales tax in a state you have never set foot in. The common threshold is $100,000 in sales or 200 transactions.
- The $800 duty-free de minimis exemption is gone for every country as of August 29, 2025. Cheap overseas sourcing no longer skips tariffs.
- Startup costs run $500 to $2,000 for a lean launch, and $5,000 to $20,000 once you add inventory, marketing, and a professional site.
- Most new stores take three to six months to reach steady revenue. Plan cash for that gap before you launch, not after.
What do you actually need to start an e-commerce business?
Six things, in this order. Skipping the legal and tax steps is the most common and most expensive mistake, because both get harder to fix once you are already selling.
- A product with demand you can prove, not just believe in
- A registered business entity and an EIN
- A selling platform that matches your model
- Sales tax registration in the states where you owe it
- A store built to convert, not just to exist
- A traffic plan you can afford to run for six months
Before any of it, decide whether you are holding inventory or not. That single choice changes your margins, your tax exposure, and your fulfillment. Our breakdown of e-commerce versus dropshipping walks through the tradeoff.
Do you need an LLC to sell online?
No, but most sellers form one anyway. You can legally sell as a sole proprietor. The reason people form an LLC is product liability: if a product you sold injures someone, a sole proprietor answers with personal assets. An LLC limits that exposure to the business.
This applies even if you did not manufacture the item. Dropshippers, private label sellers, and wholesalers can all be held liable as the seller of record. You do not get to point at the factory.
Form in your home state unless you have a specific reason not to. State filing fees range from roughly $50 to $500. Registering somewhere else usually means paying fees in two states, not one. This is general information, not legal advice, and an attorney should review your situation.
How do you get an EIN?
Apply directly on the IRS website. It is free and you get the number immediately when you apply online. An EIN is the business equivalent of a Social Security number, and you need one to open a business bank account.
Ignore anyone charging a fee for this. Services that offer to obtain an EIN for $50 to $300 are filing the same free form you can file yourself in about ten minutes.
Open the business bank account the same week. Mixing personal and business money undermines the liability protection you formed the LLC to get, and it makes tax season miserable.
Do you have to collect sales tax on online sales?
Yes, in every state where you have nexus. Since the Supreme Court decided South Dakota v. Wayfair in 2018, a state can require you to collect sales tax without you having any physical presence there. Selling enough into a state is sufficient.
The typical economic nexus threshold is $100,000 in sales or 200 transactions in a state, though the exact number varies. Start by registering in your home state, where you almost certainly have physical nexus, then add states as you cross their thresholds.
Marketplace facilitator laws help, but only partly. Amazon, Etsy, and Walmart collect and remit for sales made on their platforms. Sales through your own website are your responsibility, and Shopify does not remit for you. Collecting sales tax without a permit is illegal in most states, so register before you collect. Consult a CPA on your specific obligations.
How do 2025 tariff changes affect a new online store?
Cheap overseas sourcing no longer skips duties. The $800 de minimis exemption, which let low-value imports enter the U.S. duty-free, was eliminated for China and Hong Kong on May 2, 2025, then suspended for every other country on August 29, 2025. That suspension was continued by executive order in February 2026.
The workaround people reach for does not work anymore. Rerouting sourcing through Vietnam or Mexico to preserve duty-free treatment is no longer viable, because the suspension applies regardless of country of origin.
Price it in from day one. Bulk importing to a U.S. warehouse pays duty once at entry instead of on every parcel, which is why inventory-holding models weathered this better than per-order dropshipping. Check current rules at U.S. Customs and Border Protection, since this area is still moving.
Which e-commerce platform should you choose?
Match the platform to how much control you need. Hosted platforms trade flexibility for speed. Self-hosted platforms trade speed for ownership.
- Hosted platforms run roughly $29 to $299 per month and get you selling fast, with limits on customization and data ownership
- WooCommerce on WordPress is free as a plugin, with hosting from about $10 to $100 per month, and gives you full control of the code and the content
- Marketplaces reach buyers immediately but rent you the customer relationship rather than selling it to you
Payment processing costs about the same everywhere, near 2.9 percent plus 30 cents per transaction. Do not choose a platform on processing fees. Choose on whether you can build the store your product actually needs.
We build on WordPress and WooCommerce because it keeps content and commerce on one domain, which compounds your search visibility instead of splitting it. That is the same reasoning behind our WordPress web design services.
How much does it cost to start an e-commerce business?
Between $500 and $20,000, depending on whether you hold inventory and who builds the store. A lean launch selling digital products or print-on-demand can start near $500. A physical-product store with real inventory and a professional site lands between $5,000 and $20,000.
The costs people forget are the ones that repeat:
- State LLC filing, roughly $50 to $500, plus annual report fees
- Platform subscription and hosting, monthly and forever
- Payment processing, near 3 percent of every dollar you take
- Import duties, now unavoidable on overseas goods
- Customer acquisition, which is the largest line item nobody budgets for
Budget for the gap before revenue. Most new stores need three to six months to reach steady sales, and running out of cash in month four kills more stores than bad products do.
How do you get traffic to a brand new store?
Pick one paid channel and one owned channel, and ignore the rest until those work. New store owners spread themselves across six platforms, do all of them badly, and conclude that marketing does not work.
Paid gives you data fast. Search and shopping ads tell you within weeks whether people will actually pay your price, which is information worth more than the sales themselves at this stage.
Organic compounds slowly. Product pages, category pages, and content built around real buying questions take months to rank and then keep working. Both matter, and the mix shifts as you grow. Our approach to SEO and web design treats them as one job rather than two.
How long before an e-commerce business makes money?
Three to six months for steady revenue, though early sales can arrive in week one if you already have an audience. The first sale is a milestone, not a trend. Treat the first ninety days as learning what people will pay for, not as evidence of failure.
Nobody can promise you a timeline or a revenue figure, and you should distrust anyone who does. Results depend on your product, price, market, and the money you can afford to spend finding customers.
Can you start an e-commerce business with no money?
Not with zero, but close to it. Digital products, print-on-demand, and selling on an existing marketplace let you launch for a few hundred dollars, because you are not buying inventory before you know anyone wants it.
What you cannot skip is the legal and tax setup. An EIN is free, but state filing fees are not, and sales tax obligations do not care how small you are. Build that foundation first, then scale the parts that cost money. When you are ready for a store that converts, start your project with us.
