I am thinking of starting a small retail site and shopify looks like a fairly good tool to create the online store. However, as an individual looking to start this from scratch what do I need to do from a legal stand point? I've read different things about "S" corps and "C" corps and sole proprietorships (sp?) Frankly I quickly get tired head. What at a minimum do I need to do to protect my personal assets. Can anyone direct me to an idoits guide to the setting up shop?
I would recommend an LLC. If you go with a corp then you have to deal with the double taxation. This means that you are seen as an employee of the corp and the corp is its own legal entity. So the corp gets taxed and then you get taxed on your salary from the corp. Double taxes!
A sole proprietorship is best for taxes (you only get taxed once) but doesn't shield you from liability. So it offers NO protection
An LLC is the best of both worlds. It offers the pass through tax benefits of an sp while creating a legal entity in the same manner as a corp that shields you from liability. Just be sure to set up a separate bank account and keep all the funds and property in the LLC's name. If you just create an LLC but keep acting like an sp then someone bringing a lawsuit can "pierce the corporate veil"; meaning they can show that the LLC is just being used to avoid liability and they can come after you directly.
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|12-09-2019 08:23 AM|