Do I have to...

[Ftalgen]

Hey guys.

I was wondering if I start a ecommerce business and I intially decide not to form a legal entity such as a llc or inc, do I have to file a dba or fictious business name? Or is it accpetable (in other words legal) for me to utilize the business name until I feel the business will actually be a worthwhile venture for me to continnue funding.

[abergmanesq]

If you will be conducting a business a sole proprietor, it is a good idea to file a fictitious name (or assumed name, trade name, or DBA name, short for "doing business as").

Filing a fictitious name is not expensive and allows you to conduct your business through a business name that is different than your personal name.

The web site FormLLCDirect.com provides the requirements for filing a fictitious name in all 50 states. Typically, the fee ranges in the $20 to $30 range.

There is also a company called Rush Filing that offers fictitious name filing services.


Hope this helps and good luck with your business.

[peteVA]

So often no location is mentioned, and with members from around the world it is difficult to give a proper answer.

This sort of thing is usually "local" meaning at a municipal level in many of the states in the US. City, township, borough, maybe county. Possibly at the state level in some states.

For me filing a fictitious name is as simple as filing in a blank or two on a single sheet of paper, along with my name and address. Maybe a $10 fee to the city. Of course, they also make sure I have a business license in that name, so there goes another $30 or so.

They are as interested in the income as they are the legalities. It's just another tax for the city.

But, some states do want it filed with them, and I'm sure at a higher fee.

Still in all, it's no more than a sheet of paper and there is no reason to have to pay a "professional" to apply for yours.

Best bet, contact your local city / town / whatever hall and ask. They will tell you or point you in the right direction.

Never - Ever ask such questions on a forum and take the replies you get a serious advice. (Even from me.) Issues such as this are local, and since you do not say where you are no one can give you the exact answer for your location.

[Ftalgen]

just to clarify a bit..I am going to be testing the business concept, in other words I want to see if the potential exists for the venture. So if I went out and spoke with potential businesses or customers which I would potentially work with, would I have to have something filed by then? I dont want a business to like my concpet and have them do some type of search to see that I am not even registeres anywhere as a business.

[peteVA]

Put your money where your mouth is. Get legal and have some good business cards printed. If you are going to be making sales calls you don't want "print them yourself" business cards. Those are good for passing out at flea markets, but if you want to be taken as serious spend $25 or so for some "raised print" business cards.

And don't go for the freebies at Vista-Print. Again, good for trade shows, but not for that ever-important first impression with a new potential client / customer.

Impressions do count, and a quick rub of the thumb over the print on a card can tell whether you want to spend any time with the person, or not.

[Ftalgen]

Pete..I always do apperciate your advise becuase its honest and to the point. Now when you say "get legal" thats exactly what I am trying to do but I would like to know what would be the best or most apporiate course of legal action for someone in my position. Would you say forming a legal entity such as a corportation or llc is best do to at this early stage or when you said "get legal" were you referring to a simple dba and or business license.

[rdc]

Ftalgen,

If you don't want to pay the costs of LLC formation or incorporation right now, you should file for a DBA which allows you to represent yourself as a business to the public (as a sole proprietor). You won't have some benefits/protections like limited liability, but if you aren't doing anything yet that could raise liability, this may not yet be a concern.

As to whether you must get a DBA right now, there is no detailed definition of "doing business", but probably as soon as any transactions occur (money changes hands, or contracts are signed, deals made, etc), you are doing business and most cities/counties/states are going to require you to play by the rules. This includes not only a DBA but usually business license(s) as well... Depending upon where you live, this could mean city/county/state business licenses. While you are just gauging interest and doing "pre business" stuff, this is probably not absolutely necessary.

Eventually, once you're doing business, you will probably want to look into an LLC/corporation. Also, if you're going to enter into contracts and you plan on going the cheap route and downloading them off of the web, you should at least have them reviewed by an attorney, as a bad (or insufficient) contract can be worthless or worse if things go wrong.

Lastly, yes, all of this applies to e-commerce businesses just the same as brick and mortar (assuming you exist somewhere and are receiving revenue).

[cgh]

This will be heavily dependent on the laws of your state. Some issues that need to be thought about are:
1) Will you be collecting sales tax? If so - you may need the appropriate paperwork from the state to be able to do this.
2) Will you be purchasing items for resale? If so, you will want a resale certificate to avoid paying sales tax on the items you purcahse.
3) Without any type of registration there is no protection whatsoever for your business name, so someone else could easily squat on your business name and you would have little legal recourse.

One more very important item. Once you start doing business, your may be in violation of the zoning ordinances of your city/town, depending on what section you live in. If you're not in violation, they you just need to file a business application, otherwise, you may need to file a variance application with the Zoning Board. If you get into this, depending on where you live, you can expect an ENORMOUS amount of pain and anguish to be heaped upon you for no reason other than to show you that they have power over you.

So - it is MUCH easier to fly underneath the radar for as long as possible. This is pretty easy to do as long as you don't generate much real traffic to your house due to the business.

In reality it doesn't take much effort to form a legal entity, at least in some states, and doesn't cost much either. Think twice about forming a corp, however, because there are mandatory filings that MUST be done with a corporation that entities like LLCs, Partnerships, and Sole Propritorships don't have to worry about.

[cgh]

If you don't want anyone copying your business idea then you better get some good NDAs (non-disclosure agreements) drawn up that contain sufficient penalties for such activity and make sure EVERYONE you talk to about your business concept executes the form - properly!

[LLCtaxes]

You are not required to form an entity or DBA. Although it may provide you with more legitimacy. The tax benefits are the same if you have a DBA under your personal name or just use your personal name.

[rdc]

Actually, a DBA is required if you are a sole proprietor and are doing business under any name besides your own personal name (e.g., "John Smith" might register as "Smith Plumbing"). Furthermore, if you are an LLC or Corporation and do business under a name other than that which is filed with the Secretary of State (and includes the "LLC", "Inc.", etc.) then you must also register a DBA.

This is part of the business licensing requirements in most states (Dept of Licensing, Secretary of State, etc).