The key word is business. Determining the business structure of your niche business is for tax purposes. It allows you to determine how the government (federal, state, and local) recognizes your business entity and ensures you are paying the correct taxes on your sales and services.
What are the different business structures for an Internet business? They are the same as for a brick-and-mortar business. Below are the business structures you as a new Internet business owner must become familiar with prior to establishing your niche business.
- Sole-Proprietorship
A sole-proprietorship business is when someone owns a business that is not incorporated and they are the sole owner hence fore the term sole-proprietor. You are the sole owner of the Internet business.
- Partnership
A partnership is a business were more than one person (two or more) forms a business. Each person contributes an equal share in monies, property, labor, and expects to share in the profits and losses of the business. A partner is not an employee of the business.
- LLC (Limited Liability Corporation)
An LLC is a form of a corporation where members have limited personal liability for the debt and actions of the LLC. This is a new and popular way to structure your business in many states. It would be wise to research your particular states statutes for an LLC prior to forming. The overall basic idea of this structure is flexibility for its members and the limited personal liability it offers its members. This is can be used on an Internet business as well as a stand alone brick and mortar. You can pay to have a company form your LLC or do it yourself if your state permits it. Check with your local states policies and regulations prior to forming an LLC.
- Corporations
Structuring as a Corporation or an S Corporation brings benefits for start up businesses that expect to have shareholders. This is not recommended for a new Internet business however as the business is established and profitable this business structure may be appropriate for the business and the new new owner. Familiarizing yourself with this type of a business is essential.
There are advantages and disadvantages of structuring your business as explained above. As a new Internet niche business owner you will need to determine which one fits your ideal niche business when establishing your business. You must take into account legal and tax issues when choosing a business structure for your business. It is highly recommended you speak with an attorney or a certified public accountant (CPA) about the appropriate business structure for your business after you have completed your research into the different ways to structure your online business. Write your questions down and go prepared to get your questions answered if this information does not provide you with the needed information. Structuring your business is an important step of your start up process.
Always remember this is a Business.
