After coming up with the idea, the next step in starting your eBay shop should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate precisely what your start-up expenses will be and what your ongoing expenses will be.

Related: How to write a business plan

Finding the perfect eBay store name can be challenging. Not only does the name have to reflect what you do and be appealing to buyers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for an eBay store, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: 3 steps to forming your LLC
 

Most sellers start their eBay store from their home; however, a well run store will quickly take up a lot of space and may require a larger space to pack and ship orders. If running a business from home, be sure there are no city restrictions on running a home-based business.

Related: Choosing a business location

There are general licensing requirements for starting an eBay business from a variety of government agencies.  A few common licenses and permits that an eBay business may need include a business license, sales tax permit, and an Employer Identification Number.

Related: What licenses does an eBay store need?

Fortunately, the costs to start a new eBay store are relatively low as most of the costs are for inventory.  While it’s recommended to not go into debt in starting a store, some people will still want to purchase sufficient stock. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Marketing and acquiring customers will be your biggest challenge. There are around 790,000 active eBay stores, so you will face massive competition, depending on your product, and so you’ll have to spend money to get your store noticed.

An eBay store will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for an eBay store include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your eBay store greater visibility online.  eBay also has tools that you can use to make your store more visible.

Related: Low-cost ideas to market a new business

There are several types of insurance to consider when running an eBay store. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

The cost of insurance will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

You may need employees to help you run your eBay store.  Make sure that you select people with appropriate experience and training.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hire your first employee

Setting up an accounting system for your eBay store is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

There is software that will automatically sync with your eBay store to help automate getting the sales and shipping expenses to your accounting software.

Related: Setting up the accounting for your business