If you want to form an LLC for online business, there are several factors that you should take into account before determining if the LLC business structure is right for your online business. Some of these factors include:

  • The cost of taxes
  • Laws and other regulations regarding the ongoing maintenance of your business
  • Income tax
  • Sales tax
  • Franchise tax

How to Start Your Online Business

There are several steps that you need to take in order to start your online business. First and foremost, you’ll need to choose which type of business structure is best for you. Again, remember that you can choose an LLC, corporation, sole proprietorship, or partnership.

Assuming you want to form an LLC, its primary benefit is the fact that an LLC offers greater flexibility in terms of management structure. Furthermore, an LLC offers its members limited liability, meaning that the owners cannot be held personally liable for the debts of the LLC.

Location Where Your LLC Will Be Established

Next, you’ll want to determine where to form your online LLC. For smaller businesses, it is best to form your LLC in the state in which you live, to prevent additional costs for obtaining a registered agent in that state.

Choose Your Online Business Name

Next, you will choose your business name. There are many items to keep in mind when choosing your business name, including the following:

  • Pick a name that is easy to remember
  • Choose a name that represents you and your brand
  • You may want to choose a name that has an available matching domain name
  • Pick a name that complies with state laws, as your registration documents will be rejected if you fail to abide by such requirements

Once you have chosen a name, you should search the Internet, as well as the respective state’s Secretary of State Business Entity Search database to see if that name is already being used in your state.

Another thing to keep in mind is if you intend to operate solely outside of the U.S. but want to register in the U.S. (for purposes of selling products to the public within the U.S.), you should register in the State of Delaware.

Choose a Domain Name

Now you’ll want to obtain a domain name. Once you choose your business name, you should register a domain name as well. This will be the Internet website for your business. You’ll also need to file the required paperwork for registering your online business as an LLC. Each state has unique requirements, so be sure to understand what is required of the state in which you plan on registering.

Set up Finances

It is important that you set up your finances, as you must separate your personal assets from your LLC profits. Therefore, you should obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number will act as your LLC identification number. It will be used to open a business bank account, company credit card, and file unemployment taxes if you plan to hire employees.

Register for Sales Tax

If you plan on selling products through your online business, then you will need to collect and pay sales tax on each item sold. Be sure to check the applicable state’s requirements to find out how to register for this tax.

Obtain Business License & Permits

You should contact the local jurisdiction (county or city) in which you live to find out if you need a business license or permit to begin operating online, or if you need to register a fictitious business name or DBA (doing business as).

Set up Your Website

Now you’re ready to get your website ready. You’ll first have to purchase web hosting, which can be done through many companies that provide domain registration along with other hosting services. If you want to create a website on your own, you can do so. However, it might be beneficial to hire a professional to help you, as you could attract more customers if you let a professional help setup your website.

If you need help forming your online business LLC, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with, or on behalf of companies like Google, Stripe, and Twilio.