Legal Business Structure of Your Online BusinessWhen starting your online business you should consider what will be your legal business structure. The options in the USA are Sole Proprietor, Partnership, LLC, Sub-chapter 'S' Corporation, and Incorporation. I am not an attorney so consult with your accountant and attorney for details about what legal business structure you should use. I have tried to be as accurate as possible but you should really seek professional advice for most types of business formation. 
Sole ProprietorAs`a sole proprietor you are your business. All company profits are your personal income and you are personally liable for any company debt. Business expenses are deductible and may have tax advantages from having a home based business. In fact you could benefit from tax deductions even if your business does not earn a profit. A sole proprietorship should be registered with your local county, they will advise what you have to do. Usually the only requirement is to publish an announcement in the newspaper and pay a small fee. You should also check for any County or City zoning ordinances. A sole proprietorship ceases to exist when the owner passes away. PartnershipJust like a sole proprietorship except you share everything with a partner. The problem is you may also become liable for debt earned by your partner. Be very careful when forming a partnership. Many have been taken to the cleaners by the actions of their partner. A partnership involves a great deal of trust and should involve a written contract. LLCAn LLC has many of the advantages as a Corporation with less paperwork required. You have a limited liability so provides protection of your personal assets. The business can be structured in almost any way you choose. Each state has it's own filing and fee requirements. There are few requirements and no annual filing of paperwork. All income passes through to the owner(s) for tax purposes. The business itself is not taxed. The business can be passed on to beneficiaries, it does not cease to exist with your death. Sub-chapter 'S' CorporationSometimes referred to as the professionals Corporation. Same paperwork requirements as Corporation. Similar liability protection. Requires election of board ofdirectors/officers, annual meetings, and has annual report filing requirements. No tax on the business as all income passes through to the owners and taxed as personal income. Corporation"A corporation chartered by the state in which it is headquartered is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed, it can be sued, and it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes." Personal assets are generally protected. Could involve a lot of paperwork. For more detailed information about legal business structure visit the SBA website at link above. This page is for informational purposes only and should not be taken as legal or tax advice. This is only a brief summary. Consult your tax and legal consultants to assess your situation. Top of Page---> Legal Business Structure of Your Online Business Back to ---> Start a Business Online Using Easy Steps |