What is the best business structure for online stores?

mr_shopalot

Hi there,

I'm new here and would like to set up a business to be able to sell online. The thing is, that I'm not too sure about what type of business to form - i.e LLC, sole proprietorship, corporation, etc.

Does anyone have any advice as to what type of business might be the best to form when it comes to selling goods online in places like eBay, Amazon, your own website, etc.?

At this point, it would only be me running the business from home and I am in it until I make a full time income from it. At which point, it might make sense to get a few family employees in the business.

Thanks in advance!

richelle_salehoo1

Hi mr_shopalot,

Welcome to SaleHoo!

The most common types of business structures being used by many online businesses are: sole proprietor, partnership, limited liability company, and corporation. Each have different advantages/disadvantages so you should take these into consideration when choosing which structure to go with.

From our guide on Registering a Business in the USA -

For eBay sellers, the most common types of business structures are C Corporations, S Corporation, Limited Liability Corporations, and Sole proprietorships. Each have different advantages, for example:
Sole proprietorships require little legal structure and allow you to take advantage of tax benefits. It works very well for a one-man operation working from home. However, you are held personally responsible for anything that might go wrong and there is no scalability.
On the other hand, Corporations offer you personal protection with limited liability and also have the ability to be expanded. On the downside, they are have a minimum taxation of about $800/year, whatever the profit/loss situation, and they also require a formal legal structure. (See Appendix A on steps for forming a C Corporation).

To read more about the type of businesses and about registering one, here's the link - Link hidden: Login to view

Hope this helps, all the best :)

mr_shopalot

Well, it kind of helped - in that there are links in the guide you provided and about corporations still having to pay such a high tax amount regardless of profit or loss.

But i am really looking for some first hand experience from someone who has a business setup as to what kind of business they went with and why.

Thanks!

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