# Starting an online business. Should I go with LLC, corp, etc?



## metolious69 (Feb 15, 2012)

I want to cover my hide by making my online shirt/apparel store a legit business and be totally legal. I'm about to start selling my shirts (as well as hats and other apparel) with my logo online. My logo/name brand is already trademarked. I will NOT have a store front, just a website for sales. I will also be selling my shirts in person, at times (like tradeshows). I will also sell my shirts/apparel to retail stores. 

So my question is how should I register my online business or become a legal business? Should I just got with an LLC, sole proprietorship, or c Corp? I want to cover all the legal bases without going overboard.

I live in Kentucky and will be making the shirts myself at my house. I do plan register with the state to cover the tax issue.

If you need any additional information please let me know....and thanks for your advise.


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## BidsMaven (Sep 23, 2011)

The person who can get you squared away on this is an accountant. You need an accountant anyway for your taxes and he or she can help you fast-track through the paperwork process of getting your business set up correctly from the beginning. I suggest looking for someone local who likes to work with new businesses.


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## kheebl (Nov 26, 2014)

I would talk to an accountant also, but my guess would be a LLC would be what you need.


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## NoXid (Apr 4, 2011)

It probably does not matter which route you go, at least not at the federal level (assuming this is a typical small business and not ginormous). However, different states slice and dice LLC/SoleProprietor/Corp a bit differently, so you'll want to see what the laws are in your state. If you don't do an LLC or a Corp, you will at least need a DBA so you can do business under your business name.

Normally, for tax purposes, the feds treat an LLC the same as a SoleProprietor, and so do many, but not all, states.

I have an LLC that owns a DBA ... no really compelling reason for me to have done it that way.


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## casperboy77 (May 20, 2009)

metolious69 said:


> I want to cover my hide by making my online shirt/apparel store a legit business and be totally legal. I'm about to start selling my shirts (as well as hats and other apparel) with my logo online. My logo/name brand is already trademarked. I will NOT have a store front, just a website for sales. I will also be selling my shirts in person, at times (like tradeshows). I will also sell my shirts/apparel to retail stores.
> 
> So my question is how should I register my online business or become a legal business? Should I just got with an LLC, sole proprietorship, or c Corp? I want to cover all the legal bases without going overboard.
> 
> ...


As others have mentioned, this is difficult because it varies from State to State. I'm in Western New York so you can only imagine the mess we have here. 

You said that you Trademarked your logo. How much did it cost you to do that and do you know if you got a State Trademark or a Federal Trademark? State trademarks are pretty useless and a waste of money. They only cost about $50.00 (in NY). But a Federal Trademark ALWAYS trumps a State trademark. Federal Trademarks are about $375.00 (last time I checked).

Here in NY, you might have similar in Kentucky. I would do a LLC sub chapter S. But that is just me. I have some friends that have S corps and swear that is the way to go. My understanding is that LLC (or LTD) are just less formal. But yet people will argue that with me. Whatever way you go, you need to do it right! A corporation is a separation between business and personal. You don't want any loop holes or a non legal binding corporation. It is best to get an attorney and do it right. I have heard of many success stories using legalzoom and those companies are fine. Personally, I would just find a local attorney to do it.

I read your post a little more clearly. So you are just starting out? You can make up to $600.00 a month as a hobby (again NYS), and not have to worry about getting all of your business stuff setup right off the bat. But in the beginning you go to your county building and file for a DBA. They are instant and here in NY, in my county mind you, it only cost $1.00. You then apply for your Tax ID with your state (but don't do this right away, you got to try your business out first, just get your DBA to have your business name) and then (eventually) after having your State Tax ID, you go online and and apply for your EIN number. You do need an EIN number these days, especially come tax time! And I highly recommend that you go online and register for a DUNS number with Dun & Bradstreet (D&B | Business Information | Credit Reports | 888 480-6007). Fill out all your info. Then, time to time keep going back and update. This helps your business establish it's own credit. Lots of places still use this, I had applied for a loan that required it! Some will argue that it isn't worth doing anymore, whatever.... It doesn't hurt and you will still find places that require you to be listed and some places will ask for your DUNS number. Lastly, if a woman is registering the business then she should get the form for a disadvantaged business and most big business are required to do a certain percentage of their business with small disadvantaged businesses, so it is worth doing if a woman is registering the business. What they do is once you apply they give you a number. You just give that number to places you do business with.

I hope this little bit of info helps. Good luck! It is a tough road, I'm still hitting big bumps.........and pot holes.......and brick walls......sink holes...etc. 

-Jim


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## metolious69 (Feb 15, 2012)

Thanks for the information. Since I'm just now starting out and about to launch my website I'm going to hold off on going "legal" at the moment by going the "hobbyist" route and see how things go. If things go well then I will definitely go with an LLC or sole proprietorship along with conforming to all the other legal issues.

Sounds like the best thing to do is contact a lawyer that specializes in local business cases and go from there.

To answer the trademark question, I have a federal trademark on my brand name which is my company name (that appears on tshirts, hats and other apparel). So my logo isn't trademarked but the name is...and how it is used. 

I don't know the exact price but I spent at least $1,000 to get it trademarked (through Trademarkia.com). There were several phases of getting it trademarked. It went through several reviews/cycles and I was also assigned an attorney. It took about a year to finalize. So yes, the upfront fees are about $200-300 but in the end it costs a little more. But I guess it all depends on what is being trademarked and how you will use it. 

Thanks for all the help.


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## Posylane (Mar 3, 2011)

I don't know what state rules you may have, but there is a little crazy talk on this thread. You don't have to have a company (LLC/Corporation) to do business at the federal level, and you generally should not be needing an accountant if you are just starting out.

A lot of folks do a schedule C and don't even do what I am about to suggest.

I recommend you be a sole proprietor and get a federal tax ID and then you should be able to get a state sales tax permit for the federal tax ID. I suggest the federal tax ID because many companies you may want to deal with will ask for one. 

As long as you get a sales tax permit, and file your taxes appropriate for your business structure, you are legit. 

Going the LLC/S corp route will cost you many hundreds of dollars, you will be subjected to filing more paperwork more frequently, you may decide to hire an accountant to keep up with the paperwork which is generally $1-$2k more a year, and if you are not making a lot of money, why do this?

When you start having unusual or odd expenses (you buy capital equipment, other businesses, you travel for business) you at minimum will want an accountant you can ask questions to if you do your own taxes.

I do our own taxes, but could not do it without an accountant in the family to answer questions.


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## NoXid (Apr 4, 2011)

Posylane said:


> ...Going the LLC/S corp route will cost you many hundreds of dollars, you will be subjected to filing more paperwork more frequently, you may decide to hire an accountant to keep up with the paperwork which is generally $1-$2k more a year, and if you are not making a lot of money, why do this?
> ...


The expense and complexity depend on the state. In Oregon it is $100 and takes about 30 seconds a year to deal with. State taxes are like for a Sole Prop.

The Feds will also treat a (single member) LLC as a Sole Prop, unless you ask them to treat it as a Corp.

Everyone needs to understand the law that applies in their own state, as every state differs on Corp and LLC setup and taxation--especially on the LLC. In some states it is essentially the same as a Corp, in others it is essentially the same as a Sole Prop.


This site has good info:
LLCs (Limited Liability Companies) - Nolo.com


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## Posylane (Mar 3, 2011)

> Everyone needs to understand the law that applies in their own state, as every state differs on Corp and LLC setup and taxation--especially on the LLC. In some states it is essentially the same as a Corp, in others it is essentially the same as a Sole Prop.


That is true. Folks should be aware though that depending on the structure you set up, there could be much more paperwork than staying with a basic sole proprietorship.


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## metolious69 (Feb 15, 2012)

Thanks for the additional information. The business will consist of myself and a friend so I'm guessing the sole proprietorship will not work. I will look into the details more within my state.


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## EricDeem (May 7, 2011)

S-Corp is typically the best choice. Most accountants that I have spoke with described LLC's as good for investment companies, real estate, rentals etc. Not companies where you are selling products. S-Corps act just as a normal Corporation without many of the traditional headaches like recorded board meetings etc. "S" is for small...the IRS understands that small businesses need the protection of a traditional large corporation and created the s-corp designation specifically for this.


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## CUSALAN6262 (Jan 15, 2015)

LLC means Limited Liability Corporation and this is why people use it as it limits your personal liability in case someone eats your t-shirts and chokes or falls on your property and wants to sue you personally.

LLC linked with a Chapter Sub S corporation gives lots of personal protection and the loss or gain of the business flows directly to your personal taxes. Gives you a great way to take a full deduction on things like you car, life insurance, rent, etc.

You can go to LegalZoom.com to set up and register your corporation cheaply. Try this method before you start spending money with a lawyer directly

Good Luck


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## wellsmingo (Jul 2, 2017)

With LLC you have to do a lot less paperwork compared to C-Corps or S-Corps, also you get a nice tax flexibility (consult your CPA about this). It is safer and simpler to go with LLC, because you will not be personally liable for debts and in terms of law you are more protected from potential problems.


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## pippin decals (Aug 26, 2015)

My buddy just learned this and then i asked about it as well...I just went thru this when i started up our business.. If you plan opening more than one location and creating like a franchise and have many employees etc then you will want to go LLC....But if its going to be just one business location and only you and your immediate family then you will want to be a sole Proprietor .Since its only me and my girlfriend at one location and i dont plan on opening a franchise or multiple shops I went Sole Proprietor. Thats my 2 cents,,, You can also ask a tax person as well....


Also ,as a LLC if your ever get in trouble with taxes etc,they can basically only go after what the business owns, But as a S/P they can go after everything you own...For me since i dont own a fortune i didnt care ,But i also dont plan on getting in trouble lol...

Just do some research with where you get your business license and they will give the info you want in your state,,Every state will or could be different....


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