A domain registration business doles out and manages internet domain names. Once they’re registered with the official authorities, they’ll have access to unregistered website names in the public domain. (This business is not the same as buying up potentially profitable domain names and then reselling them at a later date to the highest bidder.) Customers will pay a small fee to set up and keep their chosen name, while the registration maintains the name and handles any specific issues that may occur.
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Northwest ($29 + State Fees)
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Start a domain registration business by following these 10 steps:
- Plan your Domain Registration Business
- Form your Domain Registration Business into a Legal Entity
- Register your Domain Registration Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Domain Registration Business
- Get the Necessary Permits & Licenses for your Domain Registration Business
- Get Domain Registration Business Insurance
- Define your Domain Registration Business Brand
- Create your Domain Registration Business Website
- Set up your Business Phone System
We have put together this simple guide to starting your domain registration business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Domain Registration Business Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state’s business records
- Federal and state trademark records
- Social media platforms
- Web domain availability
It’s very important to secure your domain name before someone else does.
What are the costs involved in opening a domain registration business?
Companies will first need to become accredited, which they can do through ICANN. It’s currently $3,500 just to apply to ICANN. (This application fee is non-refundable, regardless of whether or not you’re approved.) You’ll also need to pay a $4,000 annual fee to ICANN to keep the accreditation status.
What are the ongoing expenses for a domain registration business?
Ongoing expenses tend to be low for a domain registration business:
- Computer maintenance/replacement
- Employee salaries
- ICANN annual fees
- Commercial insurance policy
- Rent/mortgage for a physical office
Who is the target market?
Anyone starting a new website will need a domain. With the popularity of services like Wix and Squarespace, this number only grows by the day. Trying to register your own domain name is usually either expensive or full of potential legal pitfalls, so there are few exceptions to this rule.
How does a domain registration business make money?
Domain registrars charge an annual fee to every website owner. If it’s not paid on time, the website will be taken down and that name will either go back on the market or be sold to a similar business. Business owners use these annual fees to both pay themselves (and potentially their employees) and to cover any legal or administrative costs they may have. Customers pay based on both the actual name and the suffix for their name. For example, they may pay more for a .com name than a .net name.
How much can you charge customers?
The standard fee is about $10 a year for a domain name, but this number can rise and fall depending on demand or company promotion. For example, a .today suffix on GoDaddy will cost about $25 a year as opposed to a .net, which will cost about $10.
How much profit can a domain registration business make?
For the most part, it doesn’t take a lot of work to simply maintain a customer’s domain name. In other words, much of the yearly fee could be profit. However, net profit will be largely dependent on how the company is structured. GoDaddy took in more than a billion in annual revenue, but still managed to operate at a significant loss.
How can you make your business more profitable?
You may want to consider adding additional web services to create additional profits. Your customer isn’t just going to set up their domain name, they’re also going to need help hosting, certifying, and building their site. Being an all-in-one resources can be an excellent way to round out your profits.
Want a more guided approach? Access TRUiC’s free Small Business Startup Guide – a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
One crucial aspect that cannot be overlooked when starting your domain registration business is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.
This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.
In practice, this means that if your domain registration business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.
More than 84% of our readers opt to collaborate with a professional LLC formation service to kickstart their venture. We’ve negotiated a tailored discount for our readers, bringing the total down to just $29.
Note: If you’re interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It’s really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business’ expenses all in one place.
- Build your company’s credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Federal Business Licensing Requirements
It is essential to acquire the correct accreditation for your domain registration business in order to avoid legal trouble.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a domain registration business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers’ Compensation Coverage.
Find out what types of insurance your Domain Registration Business needs and how much it will cost you by reading our guide Business Insurance for Domain Registration Business.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a domain registration business
Some all-in-one domain registration businesses will promote their services on television, but most companies getting started may want to think a little smaller. Consider running internet ads with companies that offer affordable and simple website production. You can also do coupon codes for cheap domain registry (e.g., $.99 a year) to spark interest and customer loyalty. Build up your reputation with honest and favorable reviews, so more people feel comfortable choosing your registration business over another.
How to keep customers coming back
There is some degree of competition when it comes to a domain registration business, so it will all come down to how well you handle customer concerns. Providing excellent technical and personal service and keeping your name in the public eye will help.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2024 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it’s fair pricing.
Is this Business Right For You?
This business is good for someone who enjoys administrative duties as well dealing with customers. They should have a love for technology, and an inherent understanding of how websites are named and who is in the market for them.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a domain registration business?
It’s typically the registry operator who has the bulk of the duties. Their day may include any of the following:
- Maintaining databases
- Setting policies for the company
- Paying registration fees
- Researching new developments in domain law
What are some skills and experiences that will help you build a successful domain registration business?
People who are very organized will do well in this business. There will be plenty of details to decide when it comes to structuring domain names, finding the right market, and following the legal regulations associated with domain registration. They should also have a certain amount of tech skills to spot issues with potentially faulty code or to quickly fix any connectivity problems.
What is the growth potential for a domain registration business?
There is a lot of potential for the right person in this industry. As it becomes easier and easier to set up a website, more people are taking advantage of subscription services to get the word out about their interests. Whether it’s a cause, hobby, or career move, it’s not uncommon for people to have multiple websites to promote the things they care about. As this trend continues, domain names will become ever scarcer and thus more valuable to those who want to find the right name to get the most exposure.
Not sure if a domain registration business is right for you? Try our free Business Idea Generator and find your perfect idea.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
- Funding
- Events
- Guides
- Support
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a domain registration business?
Business owners should concentrate on their policies before getting started. From domain transferring to pricing, you’ll attract more customers if the policies are as clear as possible before anyone signs up. There’s a lot of advice out there about who to sign up with and who to avoid, so make sure you’re giving people plenty of options and being as fair as possible. For example, if a website owner fails to renew their domain name after a year, you may want to keep that domain name off-limits for a month as a courtesy in case the person decides to renew.
Entrepreneurs should also put some extra effort into their customer service response times. Websites by nature are incredibly immediate, and problems can happen at any time. If a person is paying you for their domain name and loses business because there’s a flaw with your equipment, then you’ll likely be held responsible for any subsequent loss of revenue to their brand. You may also want to think ahead when it comes to promoting new suffixes. As the .com names continue to diminish, companies may benefit from less popular suffixes with a strong start (e.g., food.xyz, or funinthesun.net.)
How and when to build a team
It’s not impossible for a person to take care of everything on their own in a domain registration business, at least at the beginning. However, the more the business grows, the more complications are likely to arise between the customers and the legal concerns of the company. If you hire, make sure your employees understand how the registration business works, both in terms of changing regulations and customer expectations.