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What is the best choice for online sales? (Sole,LLC,C-corp? ect)

Discussion in 'Ebay' started by JustSomeAnon, Sep 11, 2013.

  1. JustSomeAnon

    JustSomeAnon Registered Member

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    I want to obtain an EIN for my online sales, as i am reading online now trying to educate myself a bit, there are plenty of choices out there.

    Which is the best out there? Sole prop seems really easy to form, but you have all the liability correct? If its online sales, and i have no way to go bankrupt or lose money but only make profits is this a good choice? How risky is the liability for online sales?


    Sorry for all the questions, I'm a noob as or right now with this stuff.
     
  2. JustSomeAnon

    JustSomeAnon Registered Member

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    bumppppppppppp
     
  3. JustSomeAnon

    JustSomeAnon Registered Member

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    Bumpinggggggggggggggggggggggggggggggggggggggggg
     
  4. JessicaParker

    JessicaParker Newbie

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    I am not gonna claim that I'm an expert, but I worked for an accounting firm. So here's a quick rundown on what your possible choices are,

    Sole Proprietorship?As a sole business person, without any formal action, your business will default to this form. Thus, this form of business involves the least hassle. However, a sole proprietorship leaves the business owner?s personal assets at risk. Should your business incur a liability beyond its own assets, you would be held personally liable. Yes, that?s a big risk. For this reason, a sole proprietorship is often not the most advisable choice for a new business.

    Limited Liability Company (LLC)?A limited liability company can be formed by simply filing paperwork with the state in which your company will be based. There is a fee ($500 in Illinois), but the additional upkeep required is minimal. Unlike a sole proprietorship (or a general partnership), an LLC limits your personal liability in the unlikely event that your business incurs significant liabilities.


    S-Corporation?Like an LLC, S-corporations also protect your personal liability. Even better, they can have significant tax advantages to a profitable business. Of course, there is a catch (or two?) S-corps are subject to certain rigidities regarding their structure. Only individuals may be shareholders and there can only be one class of stock, meaning that if you own 10% of the company, you get 10% of the profits, no exceptions.
    Furthermore, and potentially likely to affect even more business owners, corporations are subject to much more record keeping than are other forms of business. (AKA a hassle.) While it may be a pain, that?s the nature of taxation and law. Jump through the right hoops, and you will be rewarded.


    My conclusion:
    For simplicity, sole proprietorship seems to be an easy pick for some, but it carries a huge risk, your personal property will be on the hook if your business goes south. S-Corp (A simpler form of corporation), has its merits but the record keeping, taxes etc are more complicated.
    LLC would be the right choice IMO, it has the right balance, it limits your personal liability, meaning your own property is protected in case your business is in trouble; also the record keeping and upkeep is minimal.

    Hope that helps :)
     
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