Getting Started as a MerchantAvoiding Rookie Mistakes When Setting Up Your Business

David Pirtle | August 11, 2025 | 3 min read

The Basics of Going Into Business as a Merchant

Starting a new business is exciting, no doubt, but it can also be stressful and daunting. If you’re thinking about becoming a merchant, there are a few things you need to know before you begin.

In this last chapter, we’ll arm you with a roadmap for becoming a merchant. We’ll provide a checklist of initial requirements, look at common mistakes to avoid, and offer some resources to help you on your journey.

Becoming a Merchant: What to Consider Before Getting Started

Every business is unique, but the basic steps to starting one are fairly universal. Before you dive in, though, here are a few things to think about first:

Entity Type: Decide on a business structure: sole proprietorship, LLC, partnership, or corporation?
Financing: Where will your startup capital come from? Savings, credit cards, business loans, crowdfunding, or equity investors?
Infrastructure: Get an EIN and set up a business bank account. Draft an operating agreement, partnership agreement, or corporate bylaws and issue shares if needed.
Merchant Account: Apply for a merchant account with an acquirer. Consider setup costs, ongoing fees, security features, and integrations.
Payment Processing: Integrate your point-of-sale (POS) system with your payment processor and gateway, and connect it to your merchant account.
Website and Security: Select an eCommerce platform, ensure you stay in compliance with data privacy and PCI-DSS regulations, and deploy fraud prevention tools at sign-up and checkout.

The Five Basics Steps to Get Up & Running as a Seller

Feeling a little overwhelmed? Let’s break things down into a step-by-step plan:

Step #1 | Formulate a business plan

Decide on how your business will operate, including the vertical you’ll do business in. While drafting a fleshed-out business plan can feel like an academic exercise, the act of planning can force you to think critically about your goals and fine-tune.

Step #2 | Consider Legal, Tax, and Financing Issues

Select an entity type, register your business name, apply for an Employer Identification Number (EIN), and open up a business bank account. Also determine your sales and income tax obligations, and consider whether you’ll need loans or outside investors.

Step #3 | Sign Up for a Merchant Account

Do your homework: compare different processors and merchant account providers to find the best rates and terms for your needs. Analyze total costs, including setup fees, interchange fees, and chargeback fees. Be ready to provide business details to demonstrate that you're a credible, low-risk partner.

Step #4 | Construct Your Tech Stack

Select an eCommerce platform, POS system, and payment processor/gateway. Invest in analytics tools, inventory management software, and customer relationship management tools. Integrate fraud detection and prevention tools, then connect everything to your merchant account.

Step #5 | Build Your Operation

Now, it’s time to bring your supply chain to life. Vet supplies, take delivery of inventory, and develop a program for quality control. Also consider how you’ll handle deliveries, returns, and customer service. Will you perform these functions in-house or outsource them to third-party vendors?

Common Mistakes to Avoid

Before jumping in head-first, make sure you’re making decisions that minimize risk both in the short- and long-run. Risk is arguably highest during a business’ infancy, but you can significantly mitigate it by steering clear of common pitfalls:

Mistake #1 | Not Reading Your Merchant Account Agreement

It can be tempting to skim the fine print, but that’s where the crucial details live. Pay close attention to the fee structure, contract length, and any early termination fees to ensure you know exactly what you're signing up for.

Mistake #2 | Not Budgeting for Unexpected Costs

Many new merchants grossly underestimate the true cost of startup. Be sure to factor in a financial cushion to handle unforeseen challenges like inventory shrinkage, payment processing fees, fraud losses and so on.

Mistake #3 | Treating Customer Service as an Afterthought

Great products are important, but a single bad experience can lead to customers abandoning ship early. Be prepared from day one with a clear, fair, and responsive customer service strategy including a buyer-friendly return policy.

Resources for New Merchants

The internet is full of authoritative and comprehensive information to help you get started on your journey as a merchant. High-quality resources include:

The US Small Business Administration (SBA)

The SBA is a goldmine for entrepreneurs. They offer a large library of free resources, from business plan templates to guidance on securing loans, plus access to mentorship and training programs.

SCORE.org

This nonprofit connects new business owners with experienced mentors who provide advice free of charge. Getting information from someone who has been in your shoes is invaluable and can help you avoid common errors.

Industry-Specific Publications

Whatever you're selling, there's likely a trade publication, blog, or online community dedicated to it. Everything from research by the National Retail Federation (NRF) to relatable articles on the Chargebacks911® blog can help you understand your industry better, find success as a merchant, and keep pesky chargebacks at bay.