How to Choose the Right Business Entity for Your Online StoreThere are basically 3 types of business entities (business structures):
1. Sole Proprietorship 2. Corporation 3. Partnership |
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How to Choose the Right Business Entity for Your Online Store
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Sole ProprietorshipA sole proprietorship is owned and operated by one person - you. And many entrepreneurs choose this form of entity when starting their first business or a new business as well.
If the business grows then you can always up-grade your status to a partnership or a corporation. Yet in the mean time, starting a business as a sole proprietorship continues to be the easiest, fastest and least expensive way to start an internet home business. |
However, a sole proprietorship may have its disadvantages as well. For example, when you form and run your business as a sole proprietorship you become solely responsible and liable for the business itself. However, you should also know that the chances of anything going wrong with an internet business that sells brand new products are slim to none.
Legal problems are never heard of when it comes to selling brand new products online. And if a problem should arise then most likely it will be with the product and not with your business. And if there is a problem with the product then the customer can simply return the product back to you in exchange for their money, credit or a replacement product as well.
If there are technical problems involved, such as in the case with computer hardware and software products then the customer must contact and deal directly with the manufacturers’ technical support staff to resolve the matter. (Computer product manufacturers handle all technical support for their products).
However, if liability remains a concern then you may want to set up your business as a corporation, partnership or a limited liability company. But if it’s just you by yourself, and you’re selling brand new products online, then a sole proprietorship may be the best way for you to start your business from home.
A sole proprietorship is the simplest business structure for anyone to form and can easily be done by registering your business name as a DBA (doing business as) with your state government or county clerks’ office.
Legal problems are never heard of when it comes to selling brand new products online. And if a problem should arise then most likely it will be with the product and not with your business. And if there is a problem with the product then the customer can simply return the product back to you in exchange for their money, credit or a replacement product as well.
If there are technical problems involved, such as in the case with computer hardware and software products then the customer must contact and deal directly with the manufacturers’ technical support staff to resolve the matter. (Computer product manufacturers handle all technical support for their products).
However, if liability remains a concern then you may want to set up your business as a corporation, partnership or a limited liability company. But if it’s just you by yourself, and you’re selling brand new products online, then a sole proprietorship may be the best way for you to start your business from home.
A sole proprietorship is the simplest business structure for anyone to form and can easily be done by registering your business name as a DBA (doing business as) with your state government or county clerks’ office.
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Corporation
Although forming a corporation may seem a little more complicated than starting a sole proprietorship, there may still be some advantages in this type of business entity.
For example, in a corporation, the corporation itself becomes a separate entity from the individual owner of the business. And liability now falls upon the corporation instead of the owner. Furthermore, the process of forming a corporation is not that difficult as some may suggest. And you’ll be glad to know that you don’t have to pay an attorney to form your corporation. You can do it yourself for free.
All you have to do is fill out the articles (forms) of incorporation and send it in to the Department of Corporations for your state with the appropriate filing fees which differ from state to state. And if at any time you become confused on how to fill out the articles (forms), then you can always refer to your states’ government website as every state website provides complete step-by-step instructions on filling out your corporation articles.
For example, in a corporation, the corporation itself becomes a separate entity from the individual owner of the business. And liability now falls upon the corporation instead of the owner. Furthermore, the process of forming a corporation is not that difficult as some may suggest. And you’ll be glad to know that you don’t have to pay an attorney to form your corporation. You can do it yourself for free.
All you have to do is fill out the articles (forms) of incorporation and send it in to the Department of Corporations for your state with the appropriate filing fees which differ from state to state. And if at any time you become confused on how to fill out the articles (forms), then you can always refer to your states’ government website as every state website provides complete step-by-step instructions on filling out your corporation articles.
Partnerships
A partnership is a legal business structure where two or more people share ownership, duties and responsibilities for the business. And a partnership is usually formed when additional start-up funds are required or expertise is needed.
Each individual partner should have some type of knowledge or skill that he or she may bring to the business in order to add value to the partnership and bring greater success to the business as well. And it is very important to carefully select who you choose as a partner and agree to go into a partnership with seeing that the success of the business will depend upon all partners involved in one form or another.
Partners within the business should also be able to work well and get along together without any major conflicts in order for the business to function and run smoothly. And if partners are carefully selected and agreements are made clear, then everything should go well.
Forming a partnership can become a little more complex as well. Furthermore, there are different types of partnerships such as general partnerships and limited partnerships.
Yet in either case, a contract and agreement must be made and notarized in order to be recognized as a legally binding contract. And any and all agreements must be made clear and worded carefully in order to avoid any conflict or legal complications.
Yet starting an internet business does not have to be that complicated. And it’s something that anyone can do.
However, the easiest, fastest and least expensive way to start an online store business is to form your business as a sole proprietorship. And if the day comes when employees or partners are needed, then you can always re-structure and upgrade your business to a corporation or a partnership as well. But for now, starting your business as a sole proprietorship may be the best way to go.
Each individual partner should have some type of knowledge or skill that he or she may bring to the business in order to add value to the partnership and bring greater success to the business as well. And it is very important to carefully select who you choose as a partner and agree to go into a partnership with seeing that the success of the business will depend upon all partners involved in one form or another.
Partners within the business should also be able to work well and get along together without any major conflicts in order for the business to function and run smoothly. And if partners are carefully selected and agreements are made clear, then everything should go well.
Forming a partnership can become a little more complex as well. Furthermore, there are different types of partnerships such as general partnerships and limited partnerships.
Yet in either case, a contract and agreement must be made and notarized in order to be recognized as a legally binding contract. And any and all agreements must be made clear and worded carefully in order to avoid any conflict or legal complications.
Yet starting an internet business does not have to be that complicated. And it’s something that anyone can do.
However, the easiest, fastest and least expensive way to start an online store business is to form your business as a sole proprietorship. And if the day comes when employees or partners are needed, then you can always re-structure and upgrade your business to a corporation or a partnership as well. But for now, starting your business as a sole proprietorship may be the best way to go.