[swick]

I am looking for advice from current e-commerce site owners.

What is the best way to form my business legally? LLC, Corporation, Sole proprietorship, etc..?

I've been reading a little about all, an LLC looks appealing.

What did you do and why?

[Dus10]

This is interesting to me. I have read about legal formations and such. I have also seen so many instances where people go with sole proprietorship, especially in regards to ecommerce. I personally would never choose sole proprietorship, unless there was no other way. I know there are many differences in LLC versus a C-Corp. I think LLCs are more simple and easier on taxes, but C-Corp bring more seperation and a better structure. I would also like anyone's thoughts on the matter.

[Outta Hand]

Originally posted by Dus10
This is interesting to me. I have read about legal formations and such. I have also seen so many instances where people go with sole proprietorship, especially in regards to ecommerce. I personally would never choose sole proprietorship, unless there was no other way. I know there are many differences in LLC versus a C-Corp. I think LLCs are more simple and easier on taxes, but C-Corp bring more seperation and a better structure. I would also like anyone's thoughts on the matter.

I've heard LLC's are easier and less costly to start... karen may have some great info on this too! Be sure to ask her

[mxer210]

No I wouldn't do an LLC. I own an online store, and I did a sole proprietor, and purcahsed 2 million of liability, which costs $300/year. If you read teh fine print of an LLC, they can still sue you and take from your personal assets if your business does't have very much money. LLC's are also expensive, and more work. You have to fill out more forms, which all cost money, and also need to whole regular "board member meetings" and also regularly file financial reports. This is my understanding of it, but I may be wrong. Check out www.legalzoom.com and click "law library" on the top and you can read about them. Unless you plan on being a medium-large sized online store, I would go with what I did. I also recommend asking someone at score.org. I talked to a volunteer their and they were very helpful and he recommended what I ended up doing.

[swick]

Can you get a tax id with a sole proprietorship?

I want one for doing business with suppliers.

[mxer210]

I'm pretty sure you can. A tax id is just a replacement number instead of your social security number. I just used my social security number, since it's pretty much teh same thing.

[swick]

Alot of suppliers look for a tax ID to authenticate you as a business.

I dont think a soc # works in this case.

[mxer210]

Yeah actually it does. I have a sellers permit, checking account, business visa platinum, 2 very reputable suppliers, business license, and a DBA statement all using my social security number instead of tax id. Trust me, I just got through this whole process and it's just fine.

[Dus10]

In the case of a sole prop., your tax id is your social security number. You need to think of a legal corporate entity as a virtual person. In that since, they need their own tax id. In a sole prop. you are the company, one and the same, so you just use your SS#.

[Outta Hand]

Originally posted by Dus10
In the case of a sole prop., your tax id is your social security number. You need to think of a legal corporate entity as a virtual person. In that since, they need their own tax id. In a sole prop. you are the company, one and the same, so you just use your SS#.

Thanks as i think that answers my question... even though i am in Canada. I was wondering to setup a corporate entity or a sole prop. but i want the security a corporation has.

[swick]

Does anyone know how easy it is to switch from a sole proprietorship to a corporation? It doesn't seem like it would be difficult.

I am thinking I will start off with a sole proprietorship, and when my business(es) grow in size, I will switch to an LLC, or something with more protection and tax benefits.

It does not seem like I will need much protection if I am just starting out, investing money that I already have into the business.

What are your thoughts on it?

[mxer210]

I'm not sure how easy it is to convert your business entity.I woudl ask on www.score.org. That's what i did, and the volunteer i asked gave some great advice.