The following are some benefits of having an LLC for your online business.
The first and foremost reason people would start an LLC is to provide protection for their assets. How does it work? If something goes wrong and somebody wants to sue you, they cannot sue you for your personal property and other assets.
This means that everything that doesn't have anything to do with your business is separate, so no one can touch it. Other businesses, such as a sole proprietorship, don't give you the same protection.
This is also the case when there's more than one partner in the business, and one gets sued.
The founders can decide what management structure they want in their business. There are two basic options: a management-manager structure or a member-management structure; this is not an issue with a small online business.
The first option is where the members decide to hire someone who may or not be a member to manage the company. In the other option, the member is more active in managing the business, which would be better for a small online business.
In the case of the manager-management structure, members will be passive investors in the company.
However, an LLC will allow you to form a better and more formal business structure, whether alone or with business partners.
Trust and Credibility
This is one of the main reasons you want to form an LLC for your new online business, even if it is small. The first part—trust—is very important for your customers. They will trust and support you if your business is legit.
This is the case with anything else; customers will feel better knowing they pay their money to a business. The credibility part is also essential; having a registered business will allow you to have a bank account in the business's name.
You can also build your business's credit score with banks and financial institutes if you have a legally registered company. This means you may get credit or even a business loan when you need one.
Another critical thing is that large businesses will not invest or even give grants to an unregistered small business. So if you have a registered LLC, people will know that you are taking your business seriously.
When you form an LLC, you also get an employer identification number (EIN) required by the banks you do business with. It is also required by other companies investing in and providing grants for those businesses.
Easy and Cheap to Start
Any new business starting up will want to keep the cost of getting it up and running to the bare minimum. Forming an LLC costs less than any other type of business; the main expense is the state filing fee, which differs from state to state.
Forming it is also easy, and you don't need the services of a lawyer, but it is better to use their expertise. Compared to any other business type you want to form, such as a corporation, sole proprietorship, or even a partnership, this is the easiest.
If you want to know how much it costs in your state, click here. In addition, many companies can help you start your LLC as soon as you are ready.
The only problem you may have will be to keep your personal and business matters separated, such as bank accounts and more. So there will be a learning curve as you learn how to operate and manage the business.
Even if you are still an employee in another company when you start your online business, you can still form an LLC. Remember that you don't violate your employee contract agreement if the online business is a side hustle.