Over the next decade, emerging markets are expected to continue playing a major role in the growth of eCommerce. In the US, there is still a huge potential for existing businesses and startups. There has never been a better time for creating an online business.
LLCs and Online Business
Any business, whether it’s at a physical location, or selling online, needs the safety provided by a limited liability company (LLC). Many ask: “What is an LLC?” An LLC is a formal business formation providing important benefits like avoiding double taxation, giving business credibility, and protecting the owner’s assets against lawsuits. Together with these, other significant advantages include flexibility, various tax options, and better access to business loans. General partnerships and sole proprietorships cannot offer the same protection. Also, contrary to what many people believe, LLCs have less paperwork compared to other legal business entities.
Choosing a State for an LLC
Some states have received a lot of publicity as excellent states to form an LLC. The hype around Delaware is caused by the fact that some of the largest corporations have already chosen the state known for its business-friendly laws. Another two states increasingly named as ideal places to form an LLC are Wyoming and Nevada, because of their relaxed business laws. Texas and Florida are increasingly popular with small business startups because of favorable taxation and fees. According to TRUiC, The Really Useful Information Company, the best option for a startup is to form an LLC in the state it is doing business in. There are exceptions because of the benefits this offers some businesses. If a business chose to register an LLC in a state other than the one it’s doing business in, it must also register a foreign LLC in the state where the business is located. That business then pays two filing fees; twice the maintenance fees, once for each state, and requires double the paperwork. This changes if a business is to have a presence in multiple states because then the startup must register a foreign LLC in each state.
Common types of LLCs
Most LLCs are known as “domestic LLCs” because they do business in the state they formed. As mentioned above, a foreign LLC is a business with a physical presence in another state too. When a business provides a professional service like a legal, accounting, or medical practice, it must form a professional LLC, getting the necessary state license demonstrating its qualifications. Professional LLCs are not protected against professional malpractice claims by the limitation on personal liability. Seventeen states currently allow a type of LLC known as a Series LLC. This type of LLC allows a “parent” business to provide limited liability protection to its “child” businesses, but the “child” business is also protected from the liabilities of the other businesses. The seventeen states where this is allowed are Alabama, Delaware, Washington D.C., Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Texas, Utah, and Wisconsin.
Forming an LLC
This video shows the 6 easy steps required to form an LLC. For many busy startup owners, it is easier to get on with the organization of their new business, leaving the procedure in the capable hands of business service providers. Once a state is selected, the next important step is to name the LLC and choose the services of a registered agent. Thereafter the LLC is ready to file the Articles of Organization with the state, officially forming the LLC. Every business must create an LLC Operating Agreement where everything about the ownership, members, and manager duties, shares, and other details are agreed on. Finally, the LLC applies for an Employer Identification Number (EIN), and it is ready to go into business.
Final take
From start to finish, an LLC license takes no longer than three weeks, but some states also offer expedited services. As the need for eCommerce continues to grow, many existing and new businesses are considering taking their retail online. It is just as easy for a sole proprietorship to convert to an LLC as a new business, and many are rushing to get the benefits they deserve as they take their business online.
