Do I Need an LLC for Drop Shipping? [Plus Other LLC FAQs]

What's wrong with everyone? Anton Crayola here, from Drop Ship Lifestyle. I'm here with Chad, the second girl from Better Legal Quiet, he's one of the co-founders. His company basically helps form LLCs for people all over the world. They help form them in the United States. They formed well. over a thousand of them in the last year in at least 30 different states, but able to do them in every state, so what we did was compile a list from our members of common questions about business entities and LLCs and a full disclosure before starting. I am NOT a lawyer nor is Chad, so please take all of this information as public advice which you can also find online if you have any pressing questions you want to talk to a lawyer about.

I think we would both recommend that you go out and do it, but Yeah, this information may be based on experience here, so Chad, thanks for hanging out and talking about this, yeah, yeah, I appreciate it, so this doesn't take from above as one of the most important basic questions that I would say we get from people. who are new to e-commerce is what is an LLC just when they find out that they may

need

to form a business entity, so what is an LLC? So, an LLC means a limited liability company. It's very similar to a corporation, but it's actually much easier. to set up and easier to maintain so think of it as a light corporation, it was created a couple of decades ago because corporations are so difficult to set up and maintain that an LLC is a much simpler form if you are just running a business . you want liability protection, you want professionalism, you want a separate account to do business in, that's what an LLC is for, okay, and then for people wondering if I want to start a business, do I

need

it to start from day one? an LLC, they are good, yes, it is really up to each individual person to make that decision for themselves, but if it depends on how much responsibility you are willing to take on, it depends on whether you want a business checking account or not. you want to run it through your personal checking account you want to have an official name instead of having a DBA that's tied to your personal assets, what's really important is liability protection, you know, if you're a homeowner in a car and Something goes wrong with your business.

Do you want that house and car on the chopping block if someone sues you? If the answer is you know you don't have as much liability then running it through your staff as a DBA is fine if you want that LLC protection, that liability protection and LLC is a very good way to do it, yes, and that's the key. , I mean, it's a limited liability corporation, right, if liability is the key word, like when I started my first business when I was 21 I was out of college I had nothing I had no assets so I started as a sole proprietor but it was because I didn't have cars I didn't have a family I didn't have a house I didn't have a business, so it's really up to you and what you're willing to risk, it basically depends on your risk tolerance, but also, as an

other

disclaimer, the liability protection is up to certain point, so if they do something negligent that doesn't cover So, if you specifically know that someone staying in your house or your office is bad and you invite people to walk by there, you are not protected, so you know that You can say yes, yes, the same.

One thing I learned from one of my insurance agents years ago, did you know Comike commingling your funds and you like your personal activities with your business too, even if you have an LLC or an S corporation and you start doing that, then basically everything It's up for grabs if you ever get sued, so yeah, yeah? You still have to be careful about what you are doing. It's great, an

other

question we get because people hear me say sometimes that just because I have an S corporation you not only know what the difference is, but which one I should choose. and as you mentioned above, LLCs are much simpler to form.

I think one thing that people don't realize is that they could have an LLC and you can have it for a week or you could have it for years and then if you want, you really can. pay taxes as an S corporation, so that's fine, you can get both benefits by starting Fenella, say that's right, so an LLC again is much simpler to set up, much simpler to maintain a corporation, it basically has so many steps involved and if not. If you're going to have shareholders, you won't have investors, you won't go to angels or VCS or potentially go public.

There's really no big reason to be a corporation in that sense, an LLC, though like we said. you have the benefits of a corporation, but you can also do what's called an attack, an S Corp tax election, so when you file your LLC, you can do that and we provide this document with our package, you can basically tell the IRS that I choose to choose. pay taxes as an S Corporation for my LLC, so the IRS will see your LLC entity as an S Corporation if you want and we provide that your documents yes, yes, you really get the benefit of an S Corporation with an LLC, okay, perfect for people to look at This now, if you're thinking, okay, I want to do this or something I'm seriously considering, it's good to talk about the real costs, how much does it cost to present one of these things?

And you also know, like the Church and us. What we're going to talk about varies by state because what you're filing is most likely Lea in the state where you live, but yeah, what's the kind of cost involved? Yes, so an LLC is actually not formed with the US government, but with each other. individual sovereign state, so each state has its own process for how they file them, store them, you know, all that mumbo-jumbo about how they tax them, what exactly the rates are, etc., so each state is unique in that to the price and the turnaround time, so Wyoming for example, it's instant and I think it's $100 in New York, I think it's $200 and it takes a day in Texas, two days in California, five days, it's really in All scopes and filing fees are what the state charges to run this for you and store.

For this information there are ongoing costs depending on which state you are in, so California York has higher taxes to keep your LLC current. Some states have no taxes like Wyoming Delaware Nevada some have no franchise taxes like Texas it really varies a little we have a great article on which state you should form your LLC in with better legal calm or information on a better legal document. The link below this video has a lot of information, but to have a service for Like us, we have a $2.99 ​​package where it's $2.99 ​​plus the state filing fee. Other services may be cheaper or more expensive.

The difference between us and our competitors really is that we have a package, so we give you everything you need to get into a bank and open a business checking account, whereas some of these other training providers will just have a matrix of options , you don't really know what you need and it's a little confusing, so we like to get to the point simply and transparently. this is what we charge this with the state fees is how long will they take okay and then that's like the set up cost and then the ongoing fees that you know to maintain your business to maintain that entity what do they look like?

Yes, again, that varies. by state, it's really just taxes, sometimes you know each state complies with the state, so you have to file with the state once a year or you know again on the anniversary of your business that it varies very specifically depending on the state in which they may have to pay fees to file this. some states are free, we have a rolling subscription that allows that to take care of that for you so you don't have to think about, you know, in California, when is my anniversary, when do I owe this money to the government, but they're really just taxes and you know you really want to do that research on your state, what your state charges for fees and taxes, all of that, we have a chat available so you can ask us, you know, if we have the information, we'll be happy to tell you, okay?

Perfect, yeah, a question we also get a lot is people you know who live abroad, like if you're already running their store and you're a nomad and you live in Thailand or Vietnam, but you're from the United States, it's nice. Great, I know your company could help people get established from anywhere. They don't have to come to the United States to form an entity here. Yes, we have many US citizens who are abroad or expats or even internationals who have no, in the United States, who establish LLCs within you, you know the specific status, if it is you and a citizen who is simply traveling abroad, your digital nomad, you know, that's the dream, yeah, that's not a problem, you usually have, you probably have a checking account with a banker in the United States, the real problem with being international or being international and opening an LLC is the business checking account, if you have an existing relationship with a bank, it makes it much easier, so if you are a US Citizen, have a checking account or a bank account in the United States and are located abroad, anywhere where you know they have a relationship with you and they'll say okay, we'll set up a business checking account for you, no problem.

If you're international you don't live in the US or if you're in the US that gets more complicated because banks really need to know who they're dealing with so you know if you have a friend or family member who can help you file, do it at a bank. local or if you travel to the United States to do it, that's how I would handle it, but that's it, but there are no limitations between an international or an international and a US citizen who owns an LLC jointly or an international owner of an LLC directly, there are no restrictions, yeah, so even if you're looking at this right now, you know you're Italian, you live in Italy, and you want a US LLC that's not a problem for the LLC. the ein number that you can set up while you are in italy is just one part of the bank account but honestly, as with many of the suppliers you will talk to specifically for

drop

shipping

, it doesn't matter, like using your italian bank account that way .

Well, you could open an account and USD there too, so it's up to you, you know another personal thing, but you don't need to come here right away to get a bank account, that's one thing I would say if you're going to keep it. so I guess the last question we could answer is you know a lot of people who have a

drop

ship lifestyle and they open like a network of stores, so maybe someone sells sofas like that and then they say okay, now I want they sell coffee tables, they open another store and then they want to sell tripods like cameras, they open a tripod store, so the question is should I have three LLCs or should I call one?

You know, buy all my LLC stuff, what's the plan there? that's really case by case and the person has to make that decision about how much it comes down to liability protection. Do you want liability protection between each individual business or is it a very low risk business where you can have one entity and run all these different businesses through it and just use a DBA which is also known as a fictitious name or do business where You can have different names all attached to the LLC because you know different brands, but if there is a very high risk that you could also be sued, you know that with one of your businesses you don't want that business to drag down the other three or four businesses that you have. , so if you have one that is higher risk than the others, you may want to do that. separate that as your own as your own LLC or if they are all high risk when that is an issue you may want to have them all as individual LLCs but again that is up to you it is a liability issue a branding issue if Do you want it or If you just want to have separate checking accounts for each one, you know, if you have very complex finances, you might not want to manage them all together, you might want to separate them, yes, it's up to you, yes, and if you think so .

Maybe you want to build ten different stores and three of them you're building to set up the sale, so that might make sense to, you know, put those three under a different LLC, but as Chad mentioned, the liability issue is all that matters. We talked about this. before, but different, like real estate investment companies, when they buy properties, each property is purchased through a different LLC and that's because if they get sued for that property they don't want to lose their other ten, so with what we do again I don't. I know what you're selling and I don't know how you do business so think specifically about your business but I'll tell you personally that we run all of our eCommerce business through one business entity becauseYou don't really know the risk.

Knock on wood, there's not really a lot of risk in what we're doing, so yeah, again, you know, if you're dealing with something more complex like that, always talk to a professional. Our service is generally for people who just want the LLC. They want some kind of stock, our operating agreement that is provided and we don't really get into this, but we, the really important main value for an LLC, is the state that files the ein that is provided by the IRS and the operating agreement that is. really the most valuable piece, which is the rules of your business, what proves you are the owner of your business, what happens if you and your business partner have a disagreement, who votes, if anyone invests, what kind of rights of vote you have, there is ours.

It is a 40 to 50 page document that we customize with your information, but it is quite original and works with many edge cases, but if you have something very complex and unique, always talk to a professional, talk to your lawyer, talk to CPA and get more personalized information, definitely yes, and as a starting point, you already know and make your decision, but better with legal calm. They're already doing this as I mentioned, they've done over a thousand LLC formations in the last year alone and it's going to be great when we release dropship lifestyle 7.0, which you'll be looking out for in mid-November, we'll do a few things. together, so yeah, stay tuned, you'll probably see a lot more chat and better legal stuff in the dropship lifestyle community, so thanks for talking about this and yeah, I'm looking forward to working on the other one, thanks, cool.