Incorporating Your Online Business: When a Side Venture Turns Into the Real Deal

Business is booming in the online realm! Many highly profitable e-tail businesses started off as an “on the side” job or as a hobby. As the e-commerce arena became more profitable, online sellers that started off as a side venture quickly found themselves with a profitable business. As businesses steady past their start up stage, the time comes to consider incorporation. While it does take a bit of effort to accomplish it, there are many benefits to incorporating a growing business.

Incorporation is the legally registered structure of your business. The main advantages to incorporation are legal and tax related. Incorporating your business makes it a separate entity from the business owner, protecting them from personal liability. There are potential tax benefits there as well, depending on how you pay yourself, whether or not dividends are issued, and how much the business actually makes. If the business is physically outgrowing a home office, or if you are considering trying to obtain a partner or funding in the near future, it might be time to start thinking about it.

Incorporation is not for everyone. Many factors need to be considered, such as business objective, liability, and tax burden. The Small Business Administration recommends that those considering this change make the investment to consult with an accountant or attorney.

If incorporation is something you are considering, we recommend you read eBay’s For Business Blog article; “Should You Incorporate Your Small Business”, highlighting the advantages of incorporating your business. Also, take a look at BusinessUSA . It’s a one stop shop, pulling information from different government entities into one place.

Sources:

US Small Business Administration: Is Incorporation Right for Your Business? A Primer for Small Business Owners and Entrepreneurs

US Department of Commerce: Quarterly Retail E-Commerce Sales, 1st Quarter 2015

Barbara Anderson

Marketing Coordinator