How to Start an Ecommerce LLC for Your Online Business

E-commerce businesses have grown in popularity over the past year. As of this writing, there are over 27 million e-commerce companies worldwide, including 13.7 million based in the US.

Experts believe this number will continue to rise as the years go by. They predict that the industry’s annual sales will increase by nearly $3 billion, with a growth rate of 8.1% between 2021 and 2027.

With such a productive market, it’s no surprise that most entrepreneurs want to start their online business. One of the best ways to do so is by creating an e-commerce LLC.

Find out if you need an LLC for your online business and how to start one in Nevada through this blog.

Do I Need An LLC For My Online Business?

Before we can dive into starting an e-commerce LLC in Nevada, let’s first determine if an LLC is worth it for your online business. 

A limited liability company or an LLC is a hybrid entity that combines a partnership’s pass-through tax status and a corporation’s limited liability. It gives entrepreneurs the best of both worlds; excellent tax advantages and strong liability protections. 

Suppose you want your online business to become its entity and separate yourself from any debts it incurs. In that case, an LLC is perfect for you.

Aside from its great advantages, LLCs are relatively easy to start in Nevada. It only requires a few legal documents and doesn’t have a lot of regulatory complexities. 

Nevada won’t require you to be a resident to register your LLC, nor does it ask you to hold annual meetings with your members. Ultimately, it’s one of the best ways to take risks and grow your online business. 

LLC Benefits for an E-commerce Store

E-commerce LLCs offer the following benefits:

Limited Liability Protection

Once you set up your online business as an LLC, you gain limited liability protection. LLCs shield your personal assets when a business has a potential lawsuit filed against it or unpaid debts.

For example, forming an e-commerce LLC can help you navigate potential intellectual property claims (mainly copyright infringement) and product liability. Both pose a fairly high risk of businesses facing legal consequences.

Finally, e-commerce LLCs will protect your personal assets from bankruptcy or unpaid loans.

Tax Benefits & Options

Whenever an LLC generates net income, it’s declared on the owner’s individual tax return. The state you form your E-commerce LLC in will impose income taxes (based on your tax bracket) and self-employment taxes on this amount.

Another advantage of setting up an E-commerce store as an LLC is you can choose to be taxed as a S corporation.

S corporations offer some of the benefits associated with regular LLCs, including limited liability protection and pass-through taxation. In this case, business owners are considered employees for tax purposes, meaning these individuals must be paid fairly for their work.

Credibility & Consumer Trust

Building credibility is important when starting and growing a small business. From the moment your business is established, it must work to gain and maintain consumer trust. This mostly entails offering products and services with transparency on how they’re used.

Forming an E-commerce LLC earns you consumer trust and gives your business credibility, which is crucial to obtaining financing and building business credit.

How to Get An E-commerce Business License in Nevada

Starting an e-commerce LLC may seem challenging. But in reality, it’s relatively easy. Here’s how you can turn your online business into a Nevada LLC.

Choose Your Name

The first thing you need to do when starting an LLC for your online business is to choose a name. Nevada is strict when it comes to company names. Two LLCs can’t have the same name. 

Before completing your application, check if your desired name is still available. You can use the state’s Business Search to see if anyone uses that name. 

If it’s still available, you can reserve the name and pay a $25 fee to the Secretary of the State. They’ll reserve your name for 90 days until you start working on your registration. 

File Your Paperwork

Once you’ve finalized your LLC’s name, you can start working on your paperwork. There are two documents businesses typically file: articles of organization and the initial list of members. 

Each document has a filing fee of $75 and $150, respectively. If you want to expedite your document registrations, your total filing fees could go as high as $589 for faster processing. 

Nevada offers express services ranging from $125 for 24-hour filing to $1000 for 1-hour filing. It’s also worth noting that these fees are based on Nevada’s 2022 regulations. We recommend you watch for any significant changes in their filing fees.

Designate A Registered Agent

After filing all the necessary documents, you must assign a registered agent. Nevada doesn’t require LLC owners to stay within the state and run their businesses. But they do need to have a registered agent.

A registered agent receives and processes all legal documents on behalf of your company. Nevada requires every business, local or foreign, to have one to maintain a service of process. 

You can assign an employee as your registered agent or hire one living in Nevada. 

Get Your Employer Identification Number

Now that you have a registered agent, you must get your employer identification number. You can apply for an EIN with the Internal Revenue Service (IRS) online.

An EIN is vital for opening a local bank account for your business; consider it your company’s social security number.

Obtain Your E-commerce Business License

Depending on the nature of your e-commerce LLC, Nevada may require you to get a specialized business license or two. For example, suppose you’re running an online store. You must get a retail business license from the state’s Department of Business And Industry. 

As of writing, a Nevada e-commerce business license retails for $200. Once you get your license, you need to renew it every year alongside your other annual filings.

Launch Your Online Business in Nevada Today

There’s a reason why Nevada is considered one of the most pro-business states in the country. Aside from having easy registration processes and low filing fees, the state has some of the strongest privacy protections. 

Registering your e-commerce LLC in Nevada can protect your identity from being part of public records. Unlike other states, Nevada doesn’t require LLCs to have a formal information-sharing agreement with the IRS. You and your members can stay anonymous as long as you want.

Additionally, the state’s corporate veil is stronger compared to other states. If someone decides to sue your e-commerce business, you don’t have to worry about your personal assets. Nevada will protect them and only allow the plaintiffs to claim your LLC’s assets.

Lastly, the state doesn’t have personal or corporate income taxes. Instead, they have gross receipt taxes (GRT) for LLCs. So, aside from the tax advantages of having a pass-through entity, you’ll get more exemptions when you register your LLC in Nevada. 

Ultimately, Nevada has so much to offer to e-commerce businesses. The state has created the perfect environment for growing companies by pushing for progressive tax structures and flexible regulations.

And if you need help forming your e-commerce LLC, NCH is here to assist you. NCH is one of Nevada’s leading providers of business formation services. Our business specialists are here to guide you through the entire process of starting your own business. 

We can also provide a helping hand to those that need a registered agent. NCH will help you outsource reliable people to help you out. To know more about our services, you can visit our website here.

Frequently Asked Questions About E-commerce LLCs

How do E-commerce stores work?

E-commerce stores work like brick-and-mortar stores, except they operate online. These businesses sell products, such as clothing, electronics, and household items, on a website or digital shopping platform. Customers find, browse, and purchase these goods in E-commerce stores.

How much do E-commerce stores make?

A new E-commerce store can generate a monthly revenue of:

• Over $63,000 within three months
• $127,000 within its first year
• $352,000 after three years

On average, growing E-commerce businesses can earn under $39,000 in their first month of operation and $6.5 million of total revenue after three years.

What do I need to start an E-commerce store?

When starting an E-commerce store, you’ll need the following:

• A specific product to sell
• An in-depth look at your competitors
• A business plan
• A logo, name, and a set of sales channels where you’ll sell your products
• A shipping strategy
• Sales and marketing goals

Can I have an E-commerce store with a DBA (doing business as)?

You can have an E-commerce store with a DBA. One good reason to file it is that a DBA lets you operate your business under a different name. For example, a clothing store owner must register for DBA if they don’t want to sell products using their real name.

What is the difference between an online store & E-commerce?

An online store offers products to a specific group of people, whereas E-commerce refers to the platforms businesses use to sell goods to customers. The latter also describes the different activities a seller does online, from managing inventory to processing payments.