Do I Need An LLC For Shopify? When To Start An LLC?

The prospect of starting a business is both exhilarating and daunting. You want to make a difference in the world with your service. However, if you are starting a new business, like many Shopify users, there are a lot of things you do not know, which can be annoying.

Like is an LLC required if I am starting a business on Shopify?

Follow this article and you will learn about Shopify and whether or not you need a Limited Liability Company for it.

What is a Limited Liability Company?

An LLC is a business entity that offers all of the benefits of a corporation.  It also allows you to carry through any company profits and losses on your personal tax return.

It is a mixed type of business organization in which the LLC’s owners are referred to as “members.”  These members benefit from the benefits that an LLC provides. LLC members might be a single business owner, a group of partners, or another company.

Do you need an LLC for Shopify?

It is not necessary to form a Limited Liability Company to manage a Shopify store; you can do it as a sole owner. However, It’s never a bad idea to form a limited liability company. Many smaller businesses on Shopify misjudge the potential consequences of a lawsuit.

Especially if you sell high priced electronics with a lot of potential for failure (battery leaking, overheating, etc.), you should have get an LLC. (Although I suggest not selling these risky products in any case.)

If your budget allows, you should form a Limited Liability Company regardless. But if your tight on budget, spend that in marketing and other aspects of your business first, and then form an LLC later.

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What are the benefits of forming an LLC?

There are numerous advantages to incorporating an LLC. For starters, it is a fast and affordable process.

  • It makes your business more official incase any customers want to look into it.
  • It helps with SEO since Google views you are a real business. (This is assuming you put your LLC on your footer somewhere.)
  • You can also potentially be more likely to get money from investors or loans as they see your a proper company.
  • Lastly if you ever have any lawsuit, your personal assets won’t be ceased and only your LLC. (Keep in mind that’s assuming your company gets sued and not you.)

How to Create a Limited Liability Company

Pick a name

It is crucial to name your LLC administratively. Your store name is the first impression many people have of your company, and you want it to be a good one.

It may take some time to name your online store. It may be necessary to do a lot of brainstorming and even collaborate at times. There is also a slew of free resources available, like our Free Store Name Generator, to help you get your imagination going.

Once you have decided on a name, double-check to be sure it has not already been taken. You can search business directories in several states. You should also search outside of your state, particularly if you plan to sell.

Related: Does My Shopify Store Name Matter?

Get an EIN

Your personal and business identities are separated by your employer identification number (EIN). It functions similarly to your company’s social security number (SSN). In other words, it is a one-of-a-kind numerical combination. The government uses it to identify your LLC.

Create an account for your firm

It’s time to register everything once you have your EIN and organization name. The process of registering your company is quite simple, though merchants are in particular categories.  Depending on your niche and area, you may also need to obtain a company license.

Set up a bank account

Keeping personal and corporate expenses separate is easy. Separating these accounts also ensures that your personal assets are more protected. To open a company bank account, you will need your company’s information, including your EIN.

Create and launch a website

You can launch and market your online store once you are ready to share your new business with the world.

When To Start An LLC For Shopify Dropshipping

Here Tanner Planes recommends how you shouldn’t start create an LLC until your at least seeing some sort of results. And I’d agree with him, there’s no need to worry about setting up LLC if your store isn’t even making any sort of proper profit.

Conclusion

Creating an LLC is not required or needed. But, you can create it very easily however, I recommend you dealing with these things after you have made some sales at least. You don’t know if your store will be successful or not.

I hope you guys found this article useful. If you have any questions or concerns please let me know in the comments! (Don’t Forget: This is not legal advice)

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