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Selling on the Internet

Accepting money

If you want to sell items on the Internet, you need a way that your customers can pay. Traditionally, this has involved three steps:

  1. Find an Internet Service Provider (ISP) with shopping cart capabilities. This allows you to enter the items that you want to sell and their prices.
  2. Obtain an Internet merchant account from your bank.
  3. Obtain a Gateway that connects your website to the bank. Usually the bank will tell you what gateway to use - but you should be aware of it, because both the gateway and your bank will charge you monthly for their services. The Gateway will give you online access so that you can manually process credit cards or issue refunds.
PayPal and Square are two companies that have simplified the process for online and mobile purchases.

Note: All credit card processors charge a per-transaction fee which is usually 2 to 3% of the total transaction.

  • Collecting sales tax: You must collect sales tax for any tangible (touchable) product delivered in Tennessee, unless the item will be resold by your customer. The sales tax depends on your business locations and where the item will be delivered. For more information, visit start-up kit.
  • Marketing on the Internet:

    Getting visibility on the Internet is both an art and a science. Internet ranking depends on how connected you are with other websites and how much traffic you have. It is difficult for small businesses to get exposure, unless their target market and products are very specialized. There are many opportunities to put ads on the web where you are charged a "click-thru" rate or your fees are based on number of exposures (times your ad has been seen). Like all advertising, this can be money well spent or a complete waste. Here are some tips:
    • Do the numbers. Click-thru's don't mean sales. It means they got to your website. If you are selling an item with $2 profit, and decide to pay a click-thru rate of 10 cents per click, this sounds good. But it will be great if 2% of the click-throughs result in a sale. So you will be paying for 98 people who don't buy and 2 people who do buy. 0.10 x 100 will be your cost: $10. Your profit will be 2 x 2= $4. You lost $6. Doing online marketing will only make sense for this company if they pay 1 or 2 cents per click. The cost would be $1 or $2 for 100 clicks. The profit would still be $4. The company would make money with this marketing.
    • If you are paying by number of exposures, assume that 1% of the people will click and 1% will buy. For our example of a $2 profit item, if there are 10,000 exposures, 1% or 100 people will click and 1 person will buy. If you pay $1 for the 10,000 exposures, you will still have $1 profit. But if you pay more than $2, you will have a loss.
    The World Bank's SME Toolkit has 3 tools to help you: