As the ecommerce sector continues to grow, many business owners are ready to take advantage of resources and opportunities, such as ecommerce funding or opening a business bank account, that require formal structures. One attractive option is setting up a Limited Liability Company (LLC). LLCs provide flexibility, limited liability, and tax advantages for ecommerce businesses, and are a simple way to gain professional recognition. Setting up an LLC is especially pertinent for those who want to limit personal liability and streamline business operations. The process to file for an LLC may seem daunting, especially if your business is based in the United States but you’re not, but rest assured the process is simple and has many advantages. That’s why we’ve broken it down into 4 easy steps for your ecommerce business.
- Choose a Name for Your LLC
Your LLC’s name is not just a label, it’s an identity, especially in the world of ecommerce where brand recognition can make or break your business. Most states have certain requirements and restrictions on naming, which you can find here. Typically though, the name should:
- Be unique and not easily confused with existing entities.
- Include indications of the LLC structure, such as “Limited Liability Company” or its abbreviations like “LLC.”
- Avoid restricted words that could imply association with governmental agencies.
Additionally, you want to ensure the name resonates with your target audience and is available as a domain so customers have an easy time finding you online.
- Appoint a Registered Agent
A registered agent acts as the official point of contact between the state and the LLC. They receive official documents, notifications, and service of process notices. This is a mandatory requirement in all states.
While some entrepreneurs opt to act as their own registered agents, there are reasons one might consider appointing an external agent. For one, privacy can be a concern. Having a registered agent prevents services of process and official communications from getting served at the business’s public address.
- File the Articles of Organization
Often considered the birth certificate of an LLC, the Articles of Organization is a crucial document that officially recognizes the establishment of your business entity with the state. Depending on the state, it might also be termed as the Certificate of Formation or Certificate of Organization.
While the specific requirements can vary, generally, this document must include information about the LLC’s name, its purpose, details about the registered agent, and the management structure. There might also be associated filing fees, which vary by state.
Especially for ecommerce businesses, it is vital to ensure that the stated purpose of the LLC aligns with the business’s actual activities. Be very cautious about even minute implications as misalignment could lead to potential legal challenges or issues with licenses and permits down the line.
- Create an Operating Agreement
Although not mandatory in all states, an operating agreement is highly recommended. Think of this as the rulebook or playbook for how your LLC will run. It outlines member roles, how decisions are made, procedures for handling profits and losses, and what happens if a member leaves or if a new one is added.
It’s very common for ecommerce business operations to exist as a blend of online and physical operations. Furthermore, stakeholders might be widespread across various geographies. In cases such as these, a clear operating agreement can prove invaluable as it ensures all members are on the same page regarding business operations, profit-sharing, and more.
A lot of thought goes into setting up an LLC but when it’s broken down into systematic steps it becomes much more manageable. And, once you have established an LLC your ecommerce business will have more advantages for growth and expansion, including funding and banking opportunities with Viably. Every ecommerce enterprise comes with its own set of challenges and intricacies; it’s up to you to set up the business structure in an organized manner so it is primed for success.
StartGlobal works closely with ecommerce businesses to ensure that setting up their LLC is as quick and effective as possible and partners with Viably to bring customers success through ecommerce funding.