Are LLCs Beneficial For E-Commerce Businesses

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E-Commerce, the purchase and sale of products and services over the internet, is a growing part of the US economy and, as of September 2021, was already responsible for 15% of total retail sales in the US, which retail sales are projected to bring in $933 billion in 2021 alone. Furthermore, because e-commerce has proliferated, it is further predicted that the e-commerce software application market will be worth over $6.5 billion by the end of 2021. Well-known US e-commerce platforms include Shopify and Amazon, which brought in over $197 billion in revenue in 2020.

Due to the rapid growth of e-commerce and the profit potential, many new businesses may choose to focus their attention on e-commerce. However, before doing so, business owners must decide which form their business will take; a sole proprietorship, partnership, limited liability company (LLC),r corporation.

Why Choose an LLC?

Many new business owners choose the LLC structure for their business entity. There are multiple reasons for this. Like a corporation, an LLC has corporate personhood, meaning it can buy its own property and have its own bank account. An LLC can be owned by individuals who do not need to hold the business in equal shares. LLCs do need to file annual reports, but their paperwork and filing requirements are not as extensive as those of a corporation. The biggest reason business owners choose an LLC is the protection of owners’ assets, as they are separate from the business’s assets.

An LLC is, therefore, that. There, a beneficial business structure for any new business, including e-commerce businesses. In addition, one feature of LLCs that may be of particular importance to individuals looking to start an e-commerce business, is that forming an LLC in the US does not require one to be physically present in the US. Therefore, both the LLC business structure and e-commerce lend themselves to a mobile and flexible business organization.

Forming an LLC

LLCs have many features that make them beneficial for new businesses and e-commerce businesses in particular. However, anyone looking to form an LLC for their e-commerce business will need to understand the basic steps.  While the requirements for forming an LLC differ between states, the following steps are generally standard to all LLC formations:

1. Naming the LLC.
2. Appointing a registered agent to accept delivery of essential government documents.
3. Preparing and filing the LLC formation documents, usually known as the articles of organization.
4. Drafting an operating agreement. This is not always a legal requirement but is recommended to set out how the business will run.
5. Obtaining a federal tax ID number, or EIN.
6. Setting up the financial infrastructure such as a bank account and accounting system.
7. Obtaining licenses and permits.
8. Obtaining business insurance.

Consider an LLC Formation Service

An LLC formation service will, for a fee, form your LLC for you. This is helpful to prospective business owners who are already working hard on getting their business going and do not have the capacity or knowledge to deal with the various requirements for incorporating an LLC. There are multiple formation services available that differ in terms of price and additional services. Which formation service best serves your business will depend on your specific needs.

One of the best LLC formation services is ZenBusiness, which charges $39 plus state fees for its formation service. This includes one year of registered agent services. ZenBusiness is also known for its outstanding customer feedback and its corporate responsibility. Another excellent LLC formation service, especially for entrepreneurs on a  budget, is IncFile which charges $0 plus state fees for its incorporation services. This also includes a year of free registered agent services. A year of free registered agent services is a huge benefit as, as stated above, LLCs are required to appoint a registered agent as part of their formation. A registered agent must be maintained throughout the lifetime of the LLC.

Prospective business owners can read more about the pros and cons of the various LLC formation services on Incorporation Rocket.

Final Thoughts

Due to its rapid growth and impressive revenue statistics, the e-commerce industry seems fertile ground for new businesses. Entrepreneurs should consider an LLC business structure when starting a new business, as many features of an LLC are beneficial to business owners, particularly in the e-commerce sphere. Should business owners wish to avoid the stress of incorporating the LLC themselves, they should consider an LLC service to undertake this task on their behalf.


This content is provided by an independent source for informational purposes only and does not contain legal advice. Consult an attorney or financial advisor when making decisions. This information is provided by legal writers and does not reflect the views or opinions of The Daily Sundial editorial staff.