It is often assumed if you want to accept credit cards on your website that you must have a merchant account. This is not case. You can accept credit cards with a Third Party credit card processor.

1) What is a Third Party Credit Card Processor?

A Third Party credit card processor is a company that will accept credit card payments on behalf of you or your company. The payments your customers make are processed through Third Party's own merchant account, and you retailer is paid (minus a commission fee) by Third Party processor.

No need to pay for expensive processing software, monthly fees or minimum transaction fees. As you only pay a percentage fee on a sale, you cannot lose money.

2) Should I have a Merchant Account or Third Party Processor?

Do I need a tax ID number? An Employee Identification Number (sometimes called Federal Tax ID number) is a nine-digit number assigned by IRS that identifies your business to government. You will need to get one if one or more of these apply: 1.You pay wages to any employees. 2.Your business is a corporation or partnership. 3.You file pension or excise tax returns.

If you are only employee for your business, then you can run your business as a Sole Proprietorship entity, and use your Social Security Number as your EIN. However, you should look at all of business structures before you decide which one is right for your business.

What are my business entity options? A Sole Proprietorship is most common for an upstart online business. It is owned and maintained by one individual, and has no existence apart from that individual. All income and expenses are on your personal tax return (form 1040). It is simplest form of business. However, you are personally liable for your company's liabilities. If someone sues your business or your business gets too far into debt, your personal assets can be seized.

A Partnership involves two or more people who share profits, or losses, of business. It's just like a Sole Proprietorship, except you need an EIN. Also, profits, losses, and liabilities are split between partners.

A Corporation is a separate legal entity from individuals who started it. It can be taxed and is legally liable for what it does. The benefit of a corporation is that its corporate status does not hold employees liable. The downside is that it is expensive to start, and requires a lot of bookkeeping.

A combination of a Corporation and a Partnership is Limited Liability Company (LLC). The advantage is that profits and losses are passed to owners without taxing business itself, and owners are not personally liable. However, there is no stock, fewer incentives, and loads of paperwork.

As you can see, there are pros and cons to each business structure. It is highly recommended that you talk to a local accountant or lawyer as to which structure best fits your needs.

What other forms and taxes do I need to worry about? Business License There are many types of licenses, and even for an online business you will probably need one to operate legally. If business is located within city limits, then your license comes from city. If you are outside city limits, license comes from county.