Business Structure for Your new Online Business in 2021

Choose a Business Structure for Your Online Business:

Choosing a legitimate structure for your business is like choosing your character in a video game – you usually have a few to choose from and each has its strengths and weaknesses depending on the situation. Your legal structure is a very important aspect of your business – it influences almost every decision you make, from whom you do business to how you get funding. By taking the time to understand the available business structures and choosing the right ones, you can save thousands of dollars a year and ultimately decide whether your business is successful or not.

There are several types of business units to choose from, each with different levels of personal responsibility, tax obligations, real estate regulations, and administrative complexity. We make it easy for online sellers to choose the right option for their business.

In this guide, we’ll talk about:

A schema of any type of business structure

2. How do you choose the right home for your business?

Detailing the business structure for online marketers

The Internal Revenue Service (IRS) formally recognizes dozens of types of business entities, but only a few are relevant to online sellers. Let’s take a look at the most common types of business structures for online merchants, along with the pros and cons of each.

Most Popular Online Sellers: Individual Company

As the name suggests, this type of business entity is owned and operated by a single person. The biggest advantage of the sole proprietorship is that you hardly need documentation to get started – you create the business simply by operating as a business. This facility is popular with printers and retailers, small businesses that own and operate a hobby, and those who want to keep taxes as simple as possible. If you just want to start e-commerce without a lot of paperwork or pressure on your business, a sole proprietorship is the right choice for you.

mandatory card

Almost nobody. There is no need to create forms at the state or federal level, although the company may need to obtain local licenses to legally operate. The licenses you need vary from city to city, so visit your Small Business (SBA) website or your local city hall.

fiscal responsibility

depending on profit. Income tax by income class and corporation tax for self-employed workers (15.9% in 2019) are calculated annually. For e-commerce merchants, costs for individual companies are generally lower than for other companies.

no log

None – simply by running a business, you have established a sole proprietorship. There is no need to fill in forms or pay an application fee. Also, you don’t need to register your business as a taxing unit because you pay taxes on your return.

Responsibility

Very high. 100% of personal property (car, house, etc.) is linked to the brand. If you accept debit from your company, creditors can sue you personally to collect the debt. On the other hand, if you have an unpaid personal debt, creditors may chase your company’s profits to pay off the debt. As there is no business as a separate legal entity, owners must conduct all business on their behalf, meaning the owner is personally responsible for all business transactions.

Most traders find this level of responsibility acceptable. Remember that you are personally responsible for everything you buy on behalf of your company, so be responsible when you make purchases or sign contracts.

Benefits:

• Lower barriers to entry: build the business by acting as a business

• No questions or forms to fill out

• Quick and easy to start or restore; good to start or test an idea

• Convenient, without registration fees

• Keep one person in control of all business decisions

• All income is yours

• Initial costs are tax-deductible

needles

• no legal distinction between you and your company

• It can be difficult to expand or hire new employees

• It is not possible to open commercial bank accounts or create commercial credit

• 100% liability for accrued debts and financial losses

• No personal protection for lawsuits against your company

• The owner pays its own service and income tax based on operating income

• Taxes are sometimes higher than corporate rates

I wish you the best

• People who own and manage their business

• Entrepreneurs who want to run a structurally simple company (such as an online store)

• Company with little start-up capital

• People who don’t want to do a separate corporate tax

• Test business ideas or establish yourself in the market

If you want to run your business the way you want and avoid as many problems as possible when starting a business, a sole proprietorship is the best business structure for you. While managing this type of business can save you time and money, keep in mind that you must take personal responsibility for all costs and issues associated with the business.

Ideal for beginners for two or three people: partnership

If you are starting a business with one or more partners, you can choose to work together. Partnerships are flexible because they allow members to assign different levels of responsibilities and obligations to each other. Partnerships work best for joint ventures with two or more members who are responsible for the business or for companies that receive financing from investors. There are three main types of partnerships:

A general partnership (GP) is very easy to set up, no documents are required – by simply doing business with someone else, you have joined a general partnership. This is similar to training for individual owners, but with partners.

A limited liability company (MP) allows one person (known as a “general partner”) to manage the day-to-day operations of a business, while the other invests without taking an active role in the business (known as “silent”). ). mate “). partner”). “).).

A Limited Liability Company (LLP) is a combination of a Limited Liability Company (LLC) and a partnership. All partners have a say in the industry and the individual responsibility of all partners is reduced. The amount of liability protection a limited liability company offers varies by state.

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