forming an llc for online business [Expert Answers]

Last updated : Aug 15, 2022
Written by : Jeffrey Marso
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forming an llc for online business

Which state is best for Online LLC?

  • Arizona.
  • Mississippi.
  • Missouri.
  • New Mexico.

How do I set up an online business?

  1. How to Start Your Online Business In 10 Steps.
  2. Determine Your Niche and Business Idea.
  3. Conduct Product Research.
  4. Learn About Online Business Laws.
  5. Conduct Market Research.
  6. Define Your Target Audience.
  7. Source Products to Sell Online.
  8. Evaluate Product Viability.

What is the easiest state to get LLC?

  • Delaware is the most popular state to file an LLC in because it has a strong reputation for being business-friendly and offers a fast filing process with increased protection for owners.
  • Wyoming offers low fees and great tax benefits for people looking to start an LLC.

Where is the cheapest place to create an LLC?

  • Iowa — LLC Filing fee: $50.
  • Montana — LLC Filing fee: $50.
  • Utah — LLC Filing fee: $70.
  • California — LLC Filing fee: $70.
  • Delaware — Filing fee: $90.
  • Indiana — Filing fee: $95.

Do you need permission to start an online business?

If you're wondering whether your online business needs a business license or other permits in order to operate legally, the answer is yes. Obtaining the proper ecommerce business licenses and permits is a crucial step in starting your online business.

What are the legal requirements for an online business?

  • Taxes.
  • Payment gateways.
  • Trademarks, patents and copyrights.
  • Shipping restrictions.
  • Inventory.
  • Age restrictions.
  • Business insurance.
  • Licenses and permits.

Can you run an online business alone?

Running a business on your own is doable, but it's important to remain patient when building it. Entrepreneurs often say they “wear a lot of hats.” This is true for most people starting their own business, and many business advisers suggest delegating certain tasks when possible.

What state has the cheapest LLC fee?

State registration fees range from $40 to $500. Learn about LLC registration costs in your state in our LLC cost guides. Kentucky has the lowest LLC registration fee at $40 and Massachusetts has the highest LLC registration fee at $500.

Which state has the lowest taxes for business?

Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

Which state LLC is best?

Delaware. Some experts point to Delaware as the best state for setting up an LLC due to its business-friendly legal system.

How much money should you start with an LLC?

The main cost of forming a limited liability company (LLC) is the state filing fee. This fee ranges between $40 and $500, depending on your state.

How much does it cost per year to have an LLC?

The cost to start an LLC (limited liability company) online in Utah is $70. This fee is paid to the Utah Department of Commerce when filing the LLC's Certificate of Organization. Use our free Form an LLC in Utah guide to do it yourself.

What should I name my LLC?

  • Make It Legal. The most important thing when you're choosing an LLC name is to make sure it's legal.
  • Make It Memorable. You want your LLC name to be something people can remember.
  • Make It Meaningful.
  • Make It Original.
  • Make It Distinctive.
  • Make It Domain Name Ready.
  • Make It Social Media Friendly.

Do you 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.

What are four requirements for online business?

  • Establish Your Market.
  • Register A Domain Name.
  • Host Your Domain.
  • Create Your Website's Design.
  • Set Up Online Payment Options.
  • Establish Product Delivery Options.
  • Create Website Traffic.
  • Create an Email List.

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.

How do I start an ecommerce business legally?

  1. Step 1: Research the e-commerce space and find your niche.
  2. Step 2: Select your business name and choose a legal structure.
  3. Step 3: Apply for an EIN.
  4. Step 4: Obtain business permits and licenses.
  5. Step 5: Choose an e-commerce platform and create your website.

What are the rules for selling online?

  • When selling online, you need a Terms of Service.
  • Protect all your data.
  • Protect your products online.
  • Meet your best friends: Trademark, patent, and copyright.
  • Keep good records of online transactions from the outset.
  • Have a compliant Privacy Policy.

How do you legally start an online boutique?

  1. Choose a niche you're passionate about.
  2. Identify market gaps.
  3. Write a business plan.
  4. Develop your products.
  5. Choose a brand name and logo.
  6. Price your products.
  7. Create your online store.
  8. Figure out shipping.

Can you have an online store without an 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.

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forming an llc for online business

Comment by Tommie Bakley

hi everyone I'm attorney Aiden Kramer with the law office of Aiden Kramer in Colorado and you're watching all up in your business I've made a few videos recently talking about locations of LLC's and where you should form an LLC talking about Delaware Nevada Wyoming and how to choose the proper location to form your LLC and those videos brought up questions from you guys about certain types of businesses like e-commerce business or virtual businesses where you don't really have a location for your business and your clients are all over the place and a lot of you were wondering where do I form my LLC in this instance when I don't have an office or an actual physical location if you don't have a real physical location for your office or if you work all over the place you travel around a lot go to clients a lot or you just travel and work from different states then the first place to start is with your home state the state that you consider to be a residence of that's typically going to be the state where you want to form your LLC and this applies even if you have a home office just because you don't have an actual physical formal office in an office building but your office is in your home your home is still your office so that's where your business is physically located or if you travel around a lot for work but most of the administrative work is done at your home office or if your physical files are kept at your home office then that's your office and that's where your LLC is physically located if you truly have no home maybe you're just a nomad and you're constantly on the go living out of your car then I guess in that instance you can really just pick a state whatever state works best for you whether the Delaware Wyoming the state that you were recently in whichever one you prefer that would be fine you would still for most states need a physical location address though so you would need to get either like a virtual office setup or maybe a p.o box a mailbox something like that so you have an address but for most virtual or e-commerce businesses you're gonna have some base somewhere somewhere that you go back to and do a good deal of your work whether it's your home or a coffee shop down the road if that's where you do most to your business and that's the state that your business is in that doesn't mean that your business is located at the coffee shop down the road but in that state is where you get most of your business done and so forming the LLC in that state would be appropriate and you would use either your home address or a mailbox or post office address something like that so you have a location registered with the state and in any of those instances if you really do travel around a hundred percent of the time and you pick a random state to form the LLC in make sure that with whatever option you go with you will need a registered agent in that state that you form in so if you travel around all the time but you form your LLC and Delaware Delaware is gonna require that you have a registered agent who's physically located in Delaware so you would need to find a registered agent service or someone that offers registered agent services in Delaware to use them as your registered agent so the easiest way to put it is if you don't have a physical location for your business start with your home start with wherever you live the state that you live in that's often the best place to begin if you are starting a business in Colorado and would like some assistance figuring out if you need to form in Colorado or somewhere else feel free to contact me my contact info is right here be sure to subscribe to my channel so you don't miss the next dramatic episode of all up in your business and thank you all so much for watching I'm Aiden Kramer and I'll see you next time

Thanks for your comment Tommie Bakley, have a nice day.
- Jeffrey Marso, Staff Member

Comment by Benjamin

are you thinking about forming an LLC for your online business then you're gonna like today's video hi my name is Jim harden the founding attorney here at Hawthorne law we work with online entrepreneurs to help them protect their businesses help others and build something that truly matters in the world today we want to share with you the story of an online entrepreneur and we're gonna just call him Joe Joe had a nice little business he was selling products as an affiliate and many of you can probably relate to what Joe was doing he was operating as a sole proprietor but as the business continued to grow he decided to bite the bullet and form his LLC and the reason Joe did this was because he wanted to protect his business in the event that he might get sued for something and he felt like an LLC was the best way to do that so how many of you can relate so far to what I'm talking about ends up anyone so Joe was a pretty smart guy he kind of knew intuitively what he needed to do to protect his business you know not like the rest of us what you don't think I'm a smart guy Joe decided that he didn't really need to talk to a lawyer because to be honest there's a lot of free information out there on the internet and he figured well might as well save a couple hundred bucks and just follow the LLC myself why not so that's what Joe did he went to a Secretary of State's website he downloaded some forms he filled them out on his own he re uploaded them paid the filing fees and fouled his LLC on his own great job right now while Joe was off trying to play lawyer for his own business his business was actually doing quite well it was continuing to grow and bring in revenue and bring him money and his client base and customer base was growing I mean things were going pretty good for Joe and he was pretty excited about the future of his newly formed company who knew that making money online could be so easy as an affiliate but unbeknownst to Joe some of the products that he was pushing as an affiliate were actually tainted one of the products that Joe was promoting were nutritional supplements and some of the people that have bought products through Joe's website were actually getting pretty sick because they were using these products now this wasn't initially a problem for Joe but it did become a problem for Joe because enough people got sick and the lawyers got involved class-action lawsuit was actually filed and those lawyers that were representing the plaintiffs in that class action lawsuit decided that they wanted to sue anyone and everyone that had anything to do with those products and guess who that included yep our hero Joe but there was a problem for Joe you see Joe was on vacation in Florida enjoying my ties on the beach when this lawsuit got filed and when he filed his LLC paperwork he actually never filed a proper registered agent so he left himself as the registered agent at his home address and since he was in Florida he never got served the papers actually that's not true he did finally find out about the lawsuit and that was when the mailman delivered the default judgment against him a couple months later and in addition to this Joe never completed an operating agreement for the business so with this judgment in hand the lawyers for the plaintiffs started digging around and asking about Joe's personal assets and eventually they were able to do what's called piercing the corporate veil and actually get it Joe's financial assets including his bank accounts car home financial accounts all that kind of stuff funny you should mention bank accounts you see that was another problem for Joe he never set up his business bank account all the transactions having to do with his business were actually being done through Joe's personal bank account that means the money that came in from his affiliates all the vendors he was paying all that type of stuff was done with personal funds so again this wasn't initially a problem it was actually really easy for Joe but it did become the problem because now that Joe was kind of in the public eye as a result of this lawsuit his name kind of caught the attention of the IRS call be brave whenever we talk about the IRS definitely need some coffee so as I was saying the IRS got involved decided they wanted to go back and audit some of Joe's prior tax returns meaningless to say because of all this commingling of funds that was a big problem for Joe they disallowed a lot of his deductions this caused additional taxes interest penalties and all sorts of problems for Joe so now Joe's out of business homeless running out of money and so he did what anyone would do in that situation he's a consummate entrepreneur he decided to start over but this time Joe did the smart way he decided he want to start a consulting business to teach other entrepreneurs of the problems that he had had and the mistakes he have made when he first started his own online business and this time Joe got a lawyer involved early in the process he scheduled a consult to ask questions to figure out what he needed to do to make sure his business was not only legally protected but he also want to make sure that this would it happened him previously would never happen to him ever again not only this mate Joe feel more legitimate as an entrepreneur but it also took his business to an entirely new level because now he just felt more professional and more established as a business so here's what Joe did he used a lawyer to help get his LLC get a proper Ain number set up his business bank accounts get insurance and do everything else you need to do to make sure that his business was actually legally protected he fouled trademarks to protect his brand and make sure nobody can steal his intellectual property this also gave an added sense of value to the business because now as he continued to grow his business he could license his intellectual property to other entrepreneurs so they could use it to help spread his message to even more people he purchased liability insurance to protect him from lawsuits he used a lawyer to draw up contracts that he could use with independent contractors clients and other vendors in case he needed them honestly Joe was on his way and a few years later Joe was back on top of the world a larger company approached him they wanted to purchase his new enterprise which he sold for a nice payday and this was made possible in part because of the structures and systems and legal protections that Joe had put in place from the very beginning with his business so what's the moral of this story the more of the story is that when you're just getting started as an online business it's really easy to sweep all these legal issues under the rug to say I don't need a lawyer I don't need to worry about this I can do it myself no problems but what you forget about is it someday you're gonna grow and assuming you're successful continue to build your business and the more you grow the more important is that you have these legal protections in place and if you don't protect yourself from the very beginning it becomes much easier to just ignore

Thanks Benjamin your participation is very much appreciated
- Jeffrey Marso

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