Wednesday, April 15

Your E-Shop Setup Basic Q&A...

Q: Does one need, if any, legal documents when setting up and running an online store?

A: YES! Whether you are running an online or actual store, you need to the proper legal documentations. When in the web you are exposed to unauthorized access or data theft, so it is best to set up your business as a corpration or LLC (limited liability company) rather then as a sole proprietroship or general partnership. A corporation and llc limit your personal liability as the latter two do not.

There are also the factors such as taxes and legal issues depending on your choice of business structure. A corporation has strict rules to adhere to, such as forming boards, issuing stocks and marking periodic filings (this varys statet to state). It has been recommended that you incorporate because the cost is way less to form then an LLC.

Your business will also need a federal tax identification number (you get one from Your state Dept of Taxation and Finance can authorize you collect sales tax from in state residents. Some states require online stores/retailers to collect taxes on sales to out of state buyers. This means you would have to contact each state, register your business with its taxation department and file to collect sales tax. If not you could be subject to back taxes and penalties.

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