Mailbag: International Selling, Tax Deductions and Answering Services
Since the internet is a virtual marketplace, could I create an online business from outside of the US but targetting mainly the US market (or English-speaking web users anywhere else), and can I use US-based internet-business service providers (web hosts, etc.) to set up? If I am not in the US, do I still need to secure a US business license to set up the internet-based business?
If you live outside of the United states, you should not need a business license. The purpose of the business license requirement is so that the state or city can enforce that you pay the necessary sales and business taxes if your place of business resides within their locality. That being said, there may be other fees and taxes involved in shipping your products into the United States. Unfortunately, I’m not an expert here so you should check with an accountant within your own home country.
This second question is in regards to what can be deducted from your business expenses when you run a business.
Doen’t the total business deduction have to exceed a certain amount in order for it to be deductible? The number 7.5% seems to ring a bell. So total travel + entertainment supposed to exceed 7.5% of your adjusted income..and only the portion that exceeds it is deductible. Is this true or false?
The 7.5% number that you are describing only relates to medical expenses. According to the IRS, business owners and employees may deduct medical expenses not covered by insurance as itemized deductions only if they exceed 7.5% of their adjusted gross income. This 7.5% in no way applies to other business expenses, just medical.
I mentioned in an earlier article that my wife and I were going to use an answering service to answer business calls.
What is the cost of the answering service, vs hiring your own people to do it? Or, having hours that you are available by phone listed on the website, and a “not available but leave a message” option?
My wife and I debated over whether to hire an employee just to answer phone calls but after doing a little research, we decided to go with the answering service for two main reasons. One, it is much cheaper than hiring an employee. And two, we can treat the answering service as a contractor so we can avoid doing payroll.
Currently, we already have available phone hours posted prominently on our website and we let all calls go to voicemail that arrive outside of normal office hours. What my wife and I discovered was that 80% of our phone calls are from people that are afraid of placing their order over the internet for fear of getting their credit card information stolen. So it made sense to have a 3rd party take these order calls.
The answering service can charge you two ways, by the minute or by the call. For example, one service we looked at charges a $259 monthly fee which includes 500 calls per month with additional fees for overages. However if the call results in an order being taken, they charge an additional $1.50 for the call.
Another answering service we looked at charges roughly a dollar per minute. Since we use Google voice for our calls, it’s easy to generate a full report of our call usage. And based on this usage, we estimated that using an answering service to take orders will cost us anywhere from 500-800 a month.
Did you like this article? There are many more articles like this on entrepreneurship, kids and money and how to open an online business on this website. Read about our journey how we went from earning 0 to 100 thousand dollars in 12 months with our online business. Looking for some laughs? Read about some of our crazy customer stories.
Ready To Get Serious About Starting An Online Business?
If you really want to start your own online business and quit your day job, then you absolutely have to check out my guide on How To Create A Profitable Online Store In 5 Easy Steps.In this guide, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's free!
Do You Want To Make Your Business Legit?
Let's face it, not everyone has an MBA and not everyone is educated in the mechanics of starting a business. Getting past all of the government red tape can be intimidating especially if it's your first time starting a business.My Ultimate Small Business Startup Guide will provide you with step by step instructions on everything you need to do in order to make your business legit.
Receive Free Updates!
The above two guides are just a taste of what MyWifeQuitHerJob.com has to offer. Get motivated! Follow our journey how we went from earning zero to $100,000 in the span of one year with our online store! MyWifeQuitHerJob.com delivers quality articles on building wealth, entrepreneurship and how to start and run a business.
Stumble!
Reddit!
Digg!
Del.icio.us
Facebook
Get Free Updates Via RSS
Get Free Updates Via Email
Follow Me On Twitter
Similar Posts
- Customer Stories – Wedding Day Disaster
- Do You Need A 1800 Toll Free Number For Your Online Business?
- Running A Business And Surviving With Another Child On The Way
- Hiring Employees Vs Contractors For Your Small Business – The Ultimate Small Business Startup Guide Part 5
- Growing Pains That We Are Experiencing With Our Online Business
Have you read these?
- Breaking Down The 100K A Year Barrier With Your Small Business
- 3 Reasons You Should Stock Your Own Items Instead of Drop Shipping
- Mailbag: DBAs FEINs and Shopping Cart Design
- Learning To Say No – Confessions Of A Small Business Yes Man
- How To Increase The Barriers To Entry For Your Online Store
What’s the cost incurred by brand degredation though? We used a phone service for a short time and it was horrible. We had so many customer complaints because the phone staff is not trained on your product, cannot offer helpful suggestions and represents your company according to the guidelines setup by the answering service. If they are just taking messages, that’s fine, but for taking orders, I fear you’re going to do more harm than good. If you had an individual (note that I didn’t say employee, you can contract out individual answering services to someone who is at home in another state), you could train them on your products and policies.
Best of luck, let us know how it turns out.
@Jace
That is an excellent point and one that my wife and I still are having a hard time with. Every answering service charges you an initial setup fee in order for you to train their staff. During this trial period, you are supposed to write down every possible question, product trend and product issue that you can think of so they can enter it into their database. When a customer call comes in, this database as well as your website instantly pops up onto their screen. In theory, if you are thorough enough, the operator can answer customer questions based on this database. Otherwise if they encounter a question they can’t answer, they can transfer the call directly to a number that you choose.
That being said, my wife and I plan on using this service as a supplemental system. We’ll try to answer the calls when we can, but if we’re too busy or don’t feel like picking up the phone, then we’ll let the service take care of it. We’re still not actually 100% sure we are going to go through with it. It just depends on how things are with the second child and whether having a mother’s helper will be enough.
We used an answering service for 4 months or so, but we didnt bother training them we just had them send an email and a text message of the persons question, name and phone number to us.
It worked out ok, but was a bit more spendy than we liked and eventually we went to a PBX based 800# with extensions to forward calls to different people because we have several people involved now, fulfillment in someones garage, shipping from another residence etc.
I found that my customers will leave a message with a real person who cant answer a question way more often than they will leave a voicemail, plus they answered 24×7.
Also with a voicemail my potential customers often duck me from then on, so I had only one chance to sell them and I blew it, this was not true of the live answering service I could almost always make the sale if I called them back fairly soon.
One issue with an answering service taking an order is how do you obtain the credit card info? I certainly dont want to get it by email, so I guess if you trained a contractor as suggested by Jace you could train them to enter orders in a virtual terminal as well.
Another issue is shipping questions, our products have 200 possible configurations, we could never train the people to know what is in stock and when it will ship. if they can get a rush order on time etc. this is another reason we didnt bother training because the customers almost always ask when will it ship, and there is no standard answer to that for my product line unless I invest $250,000 in inventory not happening any time soon.
Love the site!
T
@Tony
I’ve had similar experiences. People generally don’t like to leave voicemails and they seem reluctant to answer a callback because they don’t recognize the number on their caller id. Our situation is a little different than yours. We only have about 250 products to worry about (non configurable for the most part). Everything except for personalized items ship the following day because we don’t let anyone complete an order unless it’s in stock.
We’ll see how everything goes. Thanks for sharing your experience!