If you’re thinking of starting your own ecommerce business, you may be wondering if it’s necessary to incorporate as an LLC. After all, this is a common step for businesses with more than $50,000 in annual revenue. However, there are a few reasons why incorporating as an LLC may not be the best option for your business. In this article, we will explore these reasons and help you decide if incorporation is right for you.
What Is An Llc?
An LLC, or limited liability company, is a type of business entity that offers many benefits for owners and entrepreneurs. Here’s what you need to know about setting up and running an LLC:
LLC Basics
LLCs are usually more flexible and efficient than regular corporations when it comes to tax laws and accounting procedures. This is because an LLC operates as a separate legal entity from its owners. This means that profits, losses, and taxes are attributed directly to the LLC, rather than the individual owners. In addition, pass-through taxation allows LLCs to take advantage of lower tax rates compared to other types of businesses.
LLCs can also offer some protection from personal creditors in case the business goes belly-up. All members of the LLC are considered co-owners, which gives them all share in the upside (profits) and downside (failure) of the business. However, this arrangement can also be risky if not done correctly – make sure you have solid legal advice before getting started with an LLC.
Setting Up An LLC
To set up an LLC in the United States, you will need to file Articles of Organization with your state’s secretary of state within 90 days of forming your company. There is no cost associated with filing for an LLC except for fees associated with issuing/renewing certificates of registration with your state’s Corporation Commission (typically around $50). Once your articles have been filed, you will need
Why Would I Need An Llc To Sell On Shopify?
If you have your own product and are marketing it online, you can sell through Shopify without an LLC. However, if you plan to outsource some aspects of your business (such as manufacturing), an LLC might be a better option. Here are some reasons why:
LLC status allows you to take advantage of limited liability protection for your business. This means that should anything go wrong with your company—such as litigation or financial troubles—only the members of the LLC are liable for any damages.
LLCs can offer additional legal protections, such as trade secrets and intellectual property protection. By forming an LLC, you can establish rules for how these assets will be handled and protect yourself from lawsuits arising from improper use of them.
LLCs can provide more consumer protection than Sole Proprietorships or General Partnerships. For example, when a Sole Proprietor sells a product online, they’re generally responsible for ensuring that the product meets all applicable safety standards.
By contrast, when an LLC sells a product online, the company is typically only responsible for making sure that the products meet basic shipping and return policies. This means that if something goes wrong with a purchase made through an LLC-owned store, customers have less grounds to sue the company itself (rather than just one individual member).
How Much Does It Cost To Have An Llc Set Up And Sell On Shopify?
If you’re looking to start an online shop, you’ll need to think about setting up an LLC. An LLC is a business entity that offers some key benefits for entrepreneurs, such as tax breaks and the ability to operate as a separate legal entity from its owners.
LLC setup fees vary depending on the size and complexity of your business, but in general they will run between $150 and $1,000. Once your LLC is set up, it’ll take a few weeks for the necessary paperwork to be completed (including filing your articles of incorporation with state authorities). Once that’s done, you’ll need to create an active website and begin marketing your products/services.
Overall, starting and running an online shop with an LLC can be relatively affordable compared to traditional methods. With careful planning and diligent work, you can make your business thrive without incurring heavy startup costs.
Conclusion
As a small business owner, you likely want to know if you need an LLC to sell products on Shopify. The short answer is no, but there are a few considerations that you should take into account first. For example, whether or not your products fall within the boundaries of the state’s lemon law will be important to consider. Additionally, having an LLC will give you additional legal protection in case something goes wrong with your online store. Ultimately, though, it’s up to you whether or not an LLC is right for your business and we recommend seeking advice from a lawyer if you have any questions about this topic.
