Friday, April 12, 2024

How I LEGALLY Set Up My Online Business

How to Start an Online Business Legally (5 Steps)

**Step 1: Choose a Legal Entity Structure**

The first step to starting an online business is choosing a legal entity structure. This will determine how your business is taxed and how much legal protection you have.

There are three main types of legal entity structures for online businesses:

* **DBA (Doing Business As)**: A DBA is the easiest and cheapest way to start a business. It’s simply a way to operate your business under a different name than your own. DBAs don’t offer any legal protection, so they’re not a good option for businesses that are at risk of being sued.

* **LLC (Limited Liability Company)**: An LLC offers more legal protection than a DBA, so it’s a good option for businesses that are at risk of being sued. However, LLCs are more expensive to set up and maintain than DBAs.

* **S-Corp (Small Business Corporation)**: An S-Corp can save you money on taxes, but it’s more complicated to set up and maintain than an LLC. S-Corps are only available to businesses with fewer than 100 employees and $1 million in annual revenue.

If you’re not sure which legal entity structure is right for you, consult with a business attorney.

**Step 2: Get an EIN (Employer Identification Number)**

An EIN is an Employer Identification Number, and it’s required for all businesses that have employees or file taxes. You can get an EIN for free from the IRS website.

**Step 3: Get a Seller’s Permit**

A seller’s permit is required for businesses that sell goods or services in certain states. You can find out if you need a seller’s permit by visiting your state’s website.

**Step 4: Open a Business Bank Account**

It’s important to keep your personal and business finances separate, so you should open a separate business bank account. This will make it easier to track your business expenses and profits.

**Step 5: Get a Business Credit Card**

Business credit cards can offer you a number of benefits, such as rewards, travel perks, and extended warranties. They can also help you build your business credit history.

**Highlights**

* Choose a legal entity structure that’s right for your business.

* Get an EIN for your business.

* Get a seller’s permit if required by your state.

* Open a business bank account.

* Get a business credit card to earn rewards and build your business credit history.

**FAQs**

**Q: What is the difference between a DBA and an LLC?**

A DBA is a simpler and less expensive option than an LLC. However, LLCs offer more legal protection, so they’re a better choice for businesses that are at risk of being sued.

**Q: Do I need an LLC if I’m just starting out?**

If you’re just starting out and you’re not at risk of being sued, a DBA may be a good option for you. However, if you’re concerned about legal protection, you should consider forming an LLC.

**Q: How do I get an EIN?**

You can get an EIN for free from the IRS website.

**Q: Do I need a seller’s permit?**

You may need a seller’s permit if you sell goods or services in certain states. You can find out if you need a seller’s permit by visiting your state’s website.

**Q: How do I open a business bank account?**

You can open a business bank account at any bank or credit union. You’ll need to provide your EIN, business license, and other identification documents.

**Q: How do I get a business credit card?**

You can apply for a business credit card through your bank or credit union. You’ll need to provide your EIN, business license, and other identification documents.

**Q: Do I need a trademark or a patent?**

A trademark can protect your brand name and logo, while a patent can protect your invention. If you’re not sure whether you need a trademark or a patent, consult with a business attorney.

**Resources**

* [IRS.gov – How to Get an EIN](https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-ein)

* [SBA.gov – How to Get a Seller’s Permit](https://www.sba.gov/blogs/how-get-seller-s-permit)

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