Starting an online business. Sole proprietor, LLC or Corporation?

An LLC would work for you. First, if for any reason one of your clients sues you, they would have to sue the LLC and not you personally; this would help protect your personal assets. Although you have low liability with the type of work that you are doing, I have had clients that were sued because their clients did not believe that they received the services they had contracted and paid for.

To answer the question about if you can own multiple websites in one LLC, the answer is yes. The question that comes into play is if the LLC gets sued directly, do you want all of the websites/assets that it owns to be available to be seized and pay the judgment if they win the lawsuit? Remember, they will not be able to sue you personally, but they will be able to sue the LLC and take any assets that are owned within that LLC. With this in mind, it may be best to separate your design and website services business from the website acquisition business. Basically you would have an LLC that dealt directly with clients (active business LLC), and an LLC that would house all of the websites that you looking to flip (holding LLC). This way, if a client sued your active business LLC, they would not be able to get to the websites in your holding LLC. You could set up the active business LLC first, and then set up the holding LLC as needed in the future.

I would recommend that you set up the LLC in your home state. The reason why is if you set up an LLC in Nevada for example, then you will have to foreign qualify the LLC in your home state. Once you qualify your LLC in your home state, you will loose all of the tax benefits and possibly all of the asset protection benefits that were afforded to you by Nevada regulations and law. Also, you will end up paying the fee in both states, which will just cost you more money now and in the future.

Second, you would most likely benefit from taxing the LLC with an "s" election. If you use an "s" elected LLC, you will be able to reduce your self-employment taxes significantly, as well as use any business losses to offset any personal income. If you do not "s" elect your LLC, then your LLC will be considered a "disregarded entity", which means that you will pay taxes just like a sole proprietor (this means that you will pay 100% of the self employment taxes without the capability to reduce it at all). To 's' elect your LLC is a very easy process and only requires the filing of 2 simple forms with the irs.

Finally, although this point does not have to do with asset protection nor tax reduction, it is important to recognize that being able to show clients that you are an LLC will help with the client’s view of your company. Even though it is just you, it will look more established, and will give your business more credibility in the eyes of some of your potential client’s.

For more information, contact my resource listed below. I hope that my above answer helps!

You can be a sole proprietor and d/b/a (doing business as) several other company names or websites. You can also form an LLC or S-corporation for purposes of limiting your personal liability (which is what the "LL" in LLC stands for). Different states have somewhat different fees and annual reporting rules and there may be good reasons to be incorporated in another state and file as a "foreign" company where you do most of your business (e.g., Nevada fees may be lower than in your own state, even with having to file in both states, one as domestic one as foreign). It's really usually an accounting question and whether you plan to have capital investors, partners, or go it alone.

You do not need to formerly register as a company until you start employing others within the business. The only requirement is to tell the revenue that you are now self employed and then they will send to you the appropriate forms to complete so that you can be taxed on your earning profits. Best of luck with the venture.