What Form of Business Is
Best Suited to Ecommerce?

Whether you are a reseller, an affiliate or even a vendor selling your own products you craft at home, you will want to register your business in your state. This makes it easier to satisfy Uncle Sam when it comes time to file your taxes and goes a very long way toward authenticating you as a trusted brand. Unfortunately, you’ve come to a bypass on exactly what kind of business you want to form. Do you want to form a Limited Liability Company (LLC) or a sole proprietorship? The answer to that is both simple and complex. Let’s take a look at that for just a moment.

When Working Solo

Here is where a great deal of misunderstanding begins. Just because you are working solo without anyone on your team, you don’t need to register as a sole proprietorship. In fact, there are many arguments to the contrary. By registering as an LLC, you have what is referred to as limited liability in terms of protecting your personal assets. You can learn more about the differences between LLC vs Sole Proprietorship business structures on the incfile.com website, but at this point, suffice it to say that your greatest protection from personal financial losses would be to register as an LLC. The one thing you should understand here is that just because you are working alone with no partners or no one with any shares in the company, doesn’t mean that you need to be a Sole Proprietorship. You can register as an LLC.

Any Business Structure Can Work

The bottom line is that you are not really limited on the business structure you want to set up when starting an Ecommerce business. Whether you want to form a corporation with shareholders or a Sole Proprietorship with yourself as the sole owner is totally up to you. The main point to stress here is that the bulk of your business will be conducted online. That’s what Ecommerce is, so it doesn’t really matter how you file, as long as you file! You will be making an income, or taking losses, and those need to be reported annually to the Internal Revenue Service and/or to your state or local agencies. Some states don’t tax income, so it pays to hire a tax attorney to help you better understand who is entitled to taxes from any income you report.

It’s Totally Up to You

Since all the legalities are written in a tax code which is hard for the average layperson to decipher, that attorney mentioned above becomes all the more important. However, when it comes to registering your company in your state, incfile.com can do the legwork for you. The kind of business structure you choose is totally up to you and so the only thing you really need to think about is whether or not you will be offering up shares in your business at some point in time. Also, remember that an LLC helps protect any personal assets, keeping them separate from business assets, so that will probably be the best structure of all. No matter what ‘kind’ of company you form is totally up to you. Just take the time to understand your choices and you will do well.