Online businesses are popular. According to estimates, there may be as many as 14 million e-commerce businesses, and the number continues to grow. Online companies generate more than a trillion dollars in sales. Starting an online business can offer some benefits over a brick-and-mortar store. However, there are some concerns that entrepreneurs may have when they start an e-commerce business. One of the common questions is whether you need an LLC to start an online company.
What is an LLC?
There are several main options when it comes to structuring your business. Whether you are starting an online company or a physical storefront, you have four main choices for how to legally form your business: sole proprietorships, partnerships, limited liability companies, and corporations. Of these, the LLC is one of the most popular types for small businesses. A Limited Liability Company is a type of business structure. It combines attributes of a corporation with a partnership to create a hybrid option that is sometimes good for small businesses.
Benefits of an LLC
There are some benefits to establishing your business as an LLC. One of the most important advantages of an LLC over a sole proprietorship is the personal protection it offers. It shields your own personal assets against business debts as well as lawsuits. LLCs provide for flexible tax options. An owner may report business taxes on their personal tax return or may file as an “S” corporation, which offers some additional benefits for some people. An LLC is not as strict as some other forms of business entities, so it is easier to manage.
Establishing your business as an LLC gives it more legitimacy in the eyes of customers. It gives your company a more professional appearance. When you form an LLC, you are able to get bank accounts and loans for your company. You are also able to better protect your brand and intellectual property. It is relatively easy and affordable to register your company as an LLC. If you want to reduce your potential risk, you may want to look into an LLC.
How to Form an LLC in Wisconsin
There are a few steps to take in order to form an LLC in Wisconsin. You will need to register your entity by completing the Articles of Organization form and filing it either online or by mail, along with payment of the application fee. To prepare the form, you will need to gather some critical information, including the name of your business, the principal owners, a registered agent, and the address of the business.
It is also helpful to create an operating agreement, although it is not a requirement. Next, you will need to obtain a federal Employer Identification Number (EIN) from the IRS. You will also need to obtain a sales tax permit from the Wisconsin Department of Revenue. In addition, you may also need to get permits or licenses depending on your particular type of business.
While you don’t have to have an LLC to start an e-commerce business, you may find that it offers helpful benefits. An attorney will help guide you through the process. To learn more about starting an LLC, contact our legal team online or at (608) 784-8310.