Starting an Ecommerce Business; LLC Formation

There were many different options for starting a business such as going with a Corporation, S-Corp, LLC, sole-proprietorship, etc. that seemed overwhelming to say the least and why even form a business instead of operating as a sole proprietorship? The decision for me came down to protection and longevity.

Although it is very easy to just begin sales arbitrage and hit the ground running, you are at the mercy of the market and the economy. If something changes, there is a switch in consumer behavior or the item you are selling just drops off, its almost like you have to start from the beginning of gaining a new following for a new product. I did not want to do that and wanted to build something that people would recognize…A brand that people will trust.

For the business formation, I chose to go with a LLC due to the cost to organize as well as the fit to my business function. An LLC is subject to fewer regulations and requirements for taxes as compared to a corporation. The limited liability was a huge deciding factor in organizing because of selling physical products. There is no saying what could happen and if someone decides to sue, that means me personal assets would be up for grabs. I chose to do this through Legal Zoom as they made the process decently easy and painless. It cost around $1000 to organize the business and begin operating. There are professionals in the field that can help you to maintain limited liability protection and I suggest that you take full advantage of being able to learn the ins and outs of the legal entity to ensure that you are protected!

It is completely a personal preference thing, I know of many people who did not organize a formal business who are doing great. Optimistically thinking, I was preparing for future growth that would be helped along having the LLC rather than a sole-proprietorship.

In short, the reasons that aided in the decision to organize are as follows:

• Limited Liability Protection
• Taxation purposes
• Future Growth Potential

I was able to organize with no prior knowledge of business or business entity formation. So with a little research and time, you would be able to do it as well! Now its time to get started with actually selling stuff. Great we have a business but there are still no products or sales. That needed to change!

Next, we will talk about picking a direction and beginning to source products, what hardships came along with that and what is going to happen next. Stay tuned.