The Power of Your LLC

The e-commerce space is increasingly crowded. Where once a new digital retailer automatically stood out from the crowd, nowadays it’s tough to cut through the clutter. As such, a challenge that every online retailer must face is building online visibility and name recognition.

There are plenty of ways to do so, including a robust emphasis on search engine optimization (SEO), search engine marketing (SEM), social media, and beyond. And yet, there is an even more basic consideration for every e-commerce entrepreneur to consider… and that’s the legal structure you choose for your store.

Far from being a musty, impractical legal matter, your choice of legal classification can be make-or-break for your brand-building efforts. And while there’s no one “correct” answer across the board, a majority of online retailers find the LLC format to be advantageous.

But what is an LLC, and what role does it have in boosting brand visibility? Read on as we consider these questions and more.

Understanding the LLC

First and foremost, what is an LLC?

Any time you start generating revenue on the basis of self-employed business activity, you have some type of legal classification. The default status is Sole Proprietorship. This legal structure does not acknowledge any separation between the business and its owner. In other words, as a Sole Proprietor, you are your business and vice versa. All business debts are also personal debts, and all business assets count as personal assets. Business activities could easily have an impact on your personal finances or credit score

The Sole Proprietorship model is perfectly functional but lacks some of the distinct advantages of the LLC. LLC stands for Limited Liability Company, and it actually does entail the creation of a new legal entity. In other words, you and your e-commerce business are distinct from one another in the eyes of the law. You can keep business assets and liabilities separate from your personal ones.

What are the Benefits of the LLC?

So what does any of this mean in practical terms? 

For e-commerce merchants, choosing the LLC format brings with it many advantages. Some of the main ones are:

  • Your personal assets, such as your family’s house, car, or savings account, are kept safe and secure from business litigation. LLCs afford you robust personal wealth protections, including protection from creditors and from litigation.

  • An LLC comes with built-in tax flexibility, allowing you to decide how you wish to report income to the IRS. You can report income on a pass-through basis, simply declaring personal profits and avoiding double taxation, or you can opt into corporate tax rates if you so desire.

  • There is also much flexibility in how you manage your LLC. As the LLC’s owner, you can decide if and when to bring in partners, and how to allocate profits as well as responsibilities. This flexibility is ideal for a fast-growing e-commerce company.

These are just a few of the reasons why the LLC format appeals to business owners, and to digital retailers in particular. But what about the subject of boosting online visibility?

LLCs and Online Visibility

One of the great perks of the LLC is that establishing one requires you to jump through a few legal hoops, filing some paperwork, and completing the LLC approvals process. How long does it take for an LLC to be approved? Depends on the state, but it could be anywhere from a couple hours to a couple weeks.

At first glance, this may not seem like much of a benefit. After all, who likes filling out legal paperwork? But the fact that not just anyone can create an LLC is a big part of what makes LLCs so special. Simply put, establishing your digital retail business as an LLC signifies to everyone that it’s a “real” company, not just a side hustle or a hobby.

This level of professionalism and credibility comes in handy when you’re trying to earn the trust of potential buyers, convincing them that it’s perfectly safe to buy from your LLC. It also means you can receive payments in your company’s name (as opposed to your own personal name), which further helps you build trust and name recognition.

One final note: When you register your LLC, you’re legally required to select a name that has either LLC or Limited Liability Company somewhere in it. Again, this goes to the issue of conveying credibility. But LLCs can also choose any number of DBA (doing business as) names, which effectively lets you market a number of e-commerce brands under one legal umbrella. The branding possibilities are endless!

How to Establish Your E-Commerce Site as an LLC

So what are the steps required for establishing your LLC? The requirements can change a bit from one state to the next, but the typical flow of LLC registration looks something like this:

  1. First things first: Choose a name for your business that isn’t already in use by another LLC in your state. Hopefully your state will offer an online directory, making it easy to check your name’s availability.

  2. Select a person or organization to serve as your Registered Agent. Basically, your Agent receives legal correspondence on the business’ behalf. LLCs are required to name a Registered Agent who has a mailing address in the state of registry.

  3. File your Articles of Organization, which details basic information about your business. You’ll also need to file LLC fees within your state, which often amounts to under $100 total.

  4. Consider creating an Operating Agreement, which codifies some of the managerial structures for your LLC and can prevent legal disputes down the road.

  5. Set up a separate business banking account, and get an employer identification number (EIN) from the IRS.

From there, you’ll be ready to start building brand recognition for your e-commerce LLC. 

Establish a Foundation for e-Commerce Success

For any online retail store to thrive, it’s crucial to build brand recognition. The LLC structure can help you do so. Start your own LLC registration process today.