Do you need a LLC to start a business online [Fact Checked]

Last updated : Sept 6, 2022
Written by : Deidre Kormann
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Do you need a LLC to start a business online

What are the requirements to start an online business?

  • Assess the Viability of Your New Business Idea.
  • Develop a Business Plan.
  • Choose a Business Name.
  • Decide on Your Business Structure.
  • Take Care of All the Legal Tasks.
  • Build Your Website and Choose Your Sourcing and Fulfillment Methods.
  • Develop and Implement Your Prelaunch Marketing Strategies.
  • Launch Your New Business.

Should I open an LLC if I sell online products?

If you have an online business, or are thinking about starting one, you should consider forming a limited liability company (LLC). You don't need to have a formal business entity to start and run an online business, but forming an LLC can provide you with some important benefits.

How do I make my online business an LLC?

  1. Decide on Your Tax Structure.
  2. Decide on Your Business Name.
  3. Get an LLC Article of Organization Form For your State.
  4. Fill out the Articles of Organization Form.
  5. Publish a Notice in the Newspaper.
  6. Submit Your Articles of Organization.
  7. Create Your LLC Operating Agreement.

Is an LLC good for online store?

Is an LLC good for an ecommerce store? Yes. An LLC will give you personal liability protection against potential business risks as well as give your ecommerce store more tax options and credibility. It is relatively inexpensive and simple to form and maintain an LLC.

Do I need a business license to sell online?

All companies require a business license, whether they sell online or from a brick-and-mortar storefront. Businesses are required to apply for a business license because it provides a way for the government to keep track of enterprises operating in the area and keep track of tax revenue.

Does online business need to be registered?

When doing online business, you have to maintain a current account in the name of your business. To do this, you need to ensure that your business is a legal entity. To prove this, you get registered with the taxation authorities and also obtain establishment license.

At what point do I need an LLC?

Who Should Form an LLC? Any person starting a business, or currently running a business as a sole proprietor, should consider forming an LLC. This is especially true if you're concerned with limiting your personal legal liability as much as possible. LLCs can be used to own and run almost any type of business.

Do You need LLC for Amazon seller?

In short, no. You do not need an LLC to sell on Amazon. You can start selling immediately under your name as a sole proprietor. If you are beginning to explore ecommerce and want to test the waters of selling on Amazon, having a sole proprietorship is perfectly fine.

Can I sell products without registering as a company?

You are allowed to operate a sole proprietorship without registering, but you are required to register with your local government to collect and file state taxes. There is nothing wrong with running an unregistered business as long as your business is legal and meets all licensing and tax requirements.

Do you need an LLC to sell on Etsy?

The simple answer is no. You are not required to operate as an LLC to sell on Etsy. While it's not a requirement, some of the biggest sellers on the platform still decide to form an LLC for tax purposes and to protect personal assets in the event you're sued.

Do you need an LLC to sell on Instagram?

No. You don't need a business license to sell on Instagram, but according to Instagram's Commerce Eligibility Requirements you should: Follow Instagram's policies. Represent your business and domain.

How do I start my own business from home?

  1. Come up with your business idea.
  2. Decide what you're going to sell.
  3. Write a business plan.
  4. Decide on your business's legal structure.
  5. Apply for your EIN.
  6. Set up a business bank account.
  7. Look into insurance.
  8. Set up a home office.

Do I need to have an LLC for Shopify?

Do you need an LLC for Shopify? No. There is no requirement for having a business license to sell on Shopify.

What business structure is best for an online business?

A limited liability company (LLC) structure is a best-of-both-worlds kind of structure, given that it lets your ecommerce business enjoy the protection from personal liability typical of corporations, but makes the business ownership structure as simple as what is obtainable in a partnership.

What are the benefits of an LLC?

  • Personal liability protection. One of the primary benefits of forming an LLC is that it separates your personal assets from the business.
  • Inexpensive and relatively easy to form.
  • Flexible taxation.
  • Ownership and management flexibility.
  • Appropriate for individuals.

Is an online business considered a home business?

Many online businesses are ideally suited to be home-based businesses, but it's also increasingly common to see professionals from travel agents to notaries public operating home-based businesses.

What do I need to sell online?

A business license, sometimes called a “general license” or “business operating license,” gives you permission to operate as a company in a certain area — generally your city, county, or state. Almost every business — both online and otherwise — will need a business license to operate.

How do I sell something without paying taxes?

The rule of thumb is that if you used the items and then sold them for less than you bought them for, then you owe no taxes on the sale. However, if you sold an antique or collectible that had appreciated since you first acquired it, you likely would be on the hook for taxes on the profit.

How do I register my online retail business?

To start the process of registering your business online, you need to go to the website of the Ministry of Corporate Affairs. On this website, there are two forms that you need to locate. One is called DIR3 and the other is called DSC. Fill out both these forms and then you can apply for the DIN online.

How do I register my ecommerce business?

  1. Bank account in the name of the business.
  2. PAN Card of the business.
  3. Certificate of Incorporation.
  4. Memorandum of Association.
  5. Articles of Association.
  6. Identity Proof.
  7. Address Proof.
  8. Website Terms of Use.

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Do you need a LLC to start a business online

Comment by Lakita Macclellan

hey guys welcome back to my channel and for those of you who are new here welcome so as you guys can see by the title of today's video we are doing yet another business video and today's video is going to be focus on the question that everybody acts everyone who wants to start a business asks this question and the question is going to be do you need a llc to sell things online do you need a llc free online business so that question is going to be no just simply no you do not need a llc or a registered business to start selling products online but here are a few reasons why you should have one okay so first things first as you guys know when you form a llc this is literally separating your business from you so when you form a llc this is you separating your business from yourself they are not the same anymore so some of the greatest perks of having a llc is going to be that you protect your name you protect your assets you protect your home your cars everything your savings everything that you own you protect it because it's not connected to you it's separate you're also going to increase your peace of mind you're going to be protecting your privacy and you're also going to allow your business to do greater sales stop so now that i got you guys attention please go ahead and take the time out to subscribe to my channel and become a part of the notification gang you will never miss one of my videos i upload every monday and thursday subscribing helps me to keep creating these free videos for entrepreneurs like me and entrepreneurs like yourself so go ahead and hit the subscribe button back into the video you are going to accelerate your business growth and you are also going to increase your businesses credibility so when you have a llc this is going to provide you with a personal liability protection that means if your company god forbid your company gets sued um the person who is suing you they cannot come after your personal assets only the assets that belong to your business which would be your llc so that's also going to include if your business is sued or if your business gets into debit the most important reason for forming a llc for me i definitely had to do it because of tax purposes like there are so many advantages to having a llc as opposed to just having a business and not having any structure at all so when your business is formed as a llc your credibility definitely goes up customers are more likely to shop with you when they see that you have a legit business structure not only customers credibility but also the bank's credibility goes up you're able to have business banking you're able to get business credit and you're able to get business loans and this is what we want this is why we need a business structure on top of increasing your businesses credibility with the customers with the banking on top of on top of protecting your own assets one of the most important things about having a business structure a llc is that you get your own ein number and this allows you to build a business credit which is what you absolutely want because when you're building a business credit you can get credit cards solely on your business structure you can get real estate on your business structure you can get so many things on your business structure and one of the most coolest things that you can get from having your business structure is actually grants i've received grants before and the only reason i was able to get these is because i have my business properly structured if you guys don't know grants are absolutely free like it's free money that these corporations are giving out to small business owners and you're not able to get those type of grants if you don't have your businesses established llc's i don't think they give out grants to sole proprietors um you do also have to have a ein number on top of having your llc so this is what i always recommend for people to go ahead and just do the proper structuring of their business i know that sometimes you can have like side hustles and you don't want to form big businesses or you don't think your business is going to take off but it's always better to be safe than sorry so i would definitely recommend for you guys to just go ahead and get your businesses formed as llc's you can do it yourself i have videos i'll link one here on how to form the llc yourself or you can have companies do it for you there are so many people who do formations um when i did my first corporation i did use a company it was new york registered agent i'm gonna attach them below so if you guys don't have the time are you just don't want to do that yourself you want it to be properly done you don't you're scared to make mistakes so definitely go with a professional company or you can also use legalzoom they do llc's also so yeah i definitely recommend that you guys go ahead and establish your businesses as llc and don't play around with it take your businesses to be serious and start building your business credit and utilizing your business credit so yeah guys that's gonna be it for today's video on the most asked question if you need your business to be a llc in order to start a online business again the answer is no but you might want to reconsider the no answer so guys that's it for today's video thank you guys so much for watching have a blessed day peace and much love bye guys

Thanks for your comment Lakita Macclellan, have a nice day.
- Deidre Kormann, Staff Member

Comment by Avery

you probably shouldn't start an LLC for your online business today I'm going to share with you the five reasons that an LLC is not the way to go for your online business hi my name is Jim Hardin the founding attorney here at Hawthorn law will be help online entrepreneurs just like you to get your legal house in order so that you can focus on doing what you do best and that is building something that truly matters in the world today I'm going to be sharing with you the five main reasons that's not five that's ten the five main reasons you should not be starting an LLC for your online business just yet listen a lot of you out there want to get your legal house in order you want to protect your business you want to get things in order and forming an LLC maybe the first thing that you want to do if you're going out to start your online business but I'm here to tell you that forming an LLC is right for some people it's actually right for a lot of people but there are some people out there that for meenalla see is not the thing that when you want to do right away when you're just getting started and now I'm gonna switch to my other clothes because I had to refilm this intro that's kind of yeah that's what happened there the LLC's are not the end-all be-all of everything related to online business there's lots of reasons why you might not want to start an LLC you just yet listen here's the deal a lot of the information that's out there is either too generic it's too complicated or maybe you understand it but you you look at who's producing it and you're like who is this quack that's writing this video or that's doing this video on LLC's they I don't know what they're talking about there's a tremendous amount of money time and effort that's at stake if you get this wrong choosing when and how to set up an LLC this is a big legal decision this is not something that you should just go online and do without giving it any thought whatsoever I can't tell you how many times people come in to see me because they've made mistakes that could have been easily avoided if they'd just gone to see a lawyer from the beginning these are mistakes that will cost thousands of dollars to fix nobody wants to spend thousands of dollars on a lawyer I'm a lawyer I don't want to spend thousands of dollars on a lawyer we're gonna get out of here because I'm getting a little stuffy in my office here so let's let's take a walk and let's with reason number one that you may not want to start an LLC for your business and it's pretty easy it's basically that you're not making any money yet if you're not not making any money yet you definitely don't need to start an LLC because frankly you don't have any money to pay for it anyway we're gonna go outside that's my law firm right there in case you wondered if I was like legit it's just a beautiful day out today I got to come outside but reason number two that you don't want to start an LLC just yet is that you're not at risk of getting sued you don't have to worry about anything because nobody's gonna sue you for anything you don't have an a reason to form an LLC that's the big reason why people start LLC's to begin with they want to make sure their their personal assets are protected from some sort of lawsuits that might happen and if you're not at risk of getting sued then there's really no reason to start an LLC to begin with right and so reason number three kind of goes along with this if you have insurance in place that's going to help you in the event that you do get sued you might not need to form an LLC now this comes into place a lot of times when you're dealing with landlords and people that own real estate there's always the question with real estate do you form an LLC you do not form an LLC and it really just depends on personal situation how many rental properties you own and things like that but if you're in a business where you have some sort of insurance in place that you don't need to worry about getting sued then you might not need an LLC number four is kind of tricky here because it's a big mistake that a lot of people make when they're thinking about forming an LLC they want to form an LLC because there's things they think there's some sort of tax benefit to forming the LLC when in reality there is no tax bandit to benefit to forming an LLC you can actually form or you can actually operate as a sole proprietor and file a Schedule C with your 1040 that is going to give you the same tax benefits that you would have if you're forming an LLC now if I've got videos over here over here I got videos they talk about the benefits of forming alright so I had to cut the video off a little bit short before because my battery ran out number four was essentially kind of a trick question here it was because there's no tax benefit to forming an LLC so you really don't want to if you're thinking I'm gonna start an LLC because I'm gonna save money on taxes that is a bad thing to think about it's not gonna work that's just not the way it works it's there's no tax benefit you could be an LLC or a sole proprietorship your taxes are going to be exactly the same and LLC is all about liability protection and has nothing to do with them saving money on taxes now you can start a business to save money on taxes but the fact that you form an LLC has no bearing at all on how much you're gonna pay in taxes at the end of the year so the fifth reason why you do not want to start an LLC is because it's just too complicated for you if you're having a hard enough time trying to figure out how to set up your business get clients set up a website blog do some YouTube videos all these things if you're doing all that and you're just gonna try and throw an LLC on top of it you know just wait until you get some clients coming in the door you don't need to do it right away now if you've got a lot of money to spend and you want to do that by all means got hire lawyer or do it yourself but if you don't think you can do it yourself and you don't have the money to spend hiring somebody to do it properly don't waste your time or your money doing an LLC you know just on your own without any help because chances are you're probably gonna mess it up you're gonna do it wrong at some point down the road it's gonna come back to bite you you don't want to do it that way doing videos at home is really hard because I got a cat over there jumping around this is my daughter's cat he doesn't like me too much he doesn't really like anybody too much so at the end of the day when you're starting your online business you what do they want to make sure that no matter what you do you've got good advice that's helping you get to where you need to be so if you're wondering why I'm now with a light and the side drop behind me it's because I want to do this earlier I thought I was gonna do it earlier the battery kept dying I had to charge it kids got in the way life you know the whole thing now here we are at night I'm filming videos which is not where I wanted to be regardless of whether you decide to go with an LLC or not with an LLC or with the corporation or not with t

Thanks Avery your participation is very much appreciated
- Deidre Kormann

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