Small businesses are better off with a Third Party processor. The advantage is that when you sell your products, Third Party processor takes care of payment by checking card, processing it, and sending you a monthly check.

Larger businesses with a bigger turnover are likely to need a full merchant account. You will pay a bigger set-up fee for an online merchant account but pay less per transaction than with a Third Party processor. So recouping your initial outlay.

So there it is, unless you have a large business it is possible to accept credit cards online with a Third Party processor.

(c) John Lynch 2004

[ For details of Third Party credit card processors and online merchant accounts visit: http://www.merchant-account-service.com/third_party_processors.html ]

Trademarks Domain names are a large part of your internet business, and protecting it is essential. A trademark identifies source of goods or services to consumers. You cannot register a domain name by itself, because just name is merely an address. However, your online business name can be trademarked if it provides a service to consumers, such as booking flights, research on parenting, comparing insurance companies, etc. If you create items that you sell on your website, those product names can be trademarked. To learn more about trademark rules, go to www.uspto.gov.

Sales Tax Each state issues a sales and use tax which applies to use or consumption of tangible personal property and certain services. If you sell something tangible, tax must be collected. However, if you sell an e-book, it might not have to be. A sales tax number is required for each business before opening, and rules are different in every state, so this is something you need to look into. I live in Missouri, and according to Missouri state law, I am subject to sales tax if product's shipping and delivery points are both in Missouri. However, your state might be different.

Self-Employment Tax Self-employment tax (SE tax) is for individuals who work for themselves, and is a social security and Medicare tax. You must pay SE tax and file Schedule SE on Form 1040 if your net earnings from self-employment equaled or exceeded $400. To figure your net earnings, multiply your total earnings subject to SE tax by 92.35%. You will be taxed 15.3% on net earnings.

What can I deduct? As far as deducting part of your home as a business expense, that only works if that part of your home is exclusively for business. If your computer and desk are in living room, that square footage cannot be deducted. To deduct a part of your home, it must meet one of following criteria: 1.Your principal place of business 2.You meet or deal with customers or clients in this area as a normal part of your business. 3.An unattached, separate structure used in connection with your business.

There are also a few other small requirements. The only exceptions are for day-care providers and storage of inventory or product samples used in your business. If you buy a computer and over 50% of its use is for business, you can deduct depreciation on portion of your computer used for business as a miscellaneous itemized deduction. Expenses such as web hosting, domain registration, etc, can all be deducted as business expenses.

Some rules vary from state to state and even county to county, so be sure to stop by your local county clerk's office or talk to other home businesses in area to ensure everything is compliant. For more information on rules and taxes, go to www.irs.gov and www.ftc.gov.