Starting a new company

[bladesharper]

I am planning to run a website sort of like Ebay.com. My business will be available to anyone worldwide, but operated at home. I am not selling anything but just offering my website for people to sell their items, then I collect certain percent (%) for commission once the item is sold. So I am not sure if I should register my company as an LLC or Inc. I have been doing a little research, and seem like an Inc will work better for me. But I still need some more advice, especially from the people who had already started a company.

To file my business name within the state I'd live. What are the steps to register my business legally?

And how about the steps to register with the federal?


Thank you for your honest reply.

 

[jharris352]

The question of what type of business entity and where to form it is covered in many places but I'll give you a head start on what to look for.

So I am not sure if I should register my company as an LLC or Inc.

The key differences between an LLC and a Inc in my mind is that with an LLC you do not have to pay business taxes and personal taxes. You can elect (in the first 90 days) pay taxes like a S-corp or a partnership or a sole proprietor. Please see a CPA about this before you get started.

The second real difference is apportionment of income and losses. With an LLC you do not own a PERCENTAGE of the business. People totally misunderstand this about an LLC. Each member is a member but members do not own a certain percentage of the business. The bylaws determine how decisions are made among members and who is a managing member versus a non-managing member. Each managing member has ONE vote and tie breaking is done by the bylaws.

Whenever there is income or losses to distribute the members distribute them at will. One year I can get 60% of the income and the next 100% of the loss if we all agree on it. This is done without changing the "percentage of ownership." I hope that makes sense. Basically the percentage of income or loss has no relation to how much management authority you have. You decide how much to assign every time.

To file my business name within the state I'd live. What are the steps to register my business legally?

Go to the Secretary of State's office online and read their section on starting a business. That should give you all the information you need.

Once you have done that go here to read about and apply for an EIN (Employer Identification Number) which is a tax ID number for your business. It is like a social security number but NO you can't use it to clean up your credit.

When you get to your articles of incorporation ACTUALLY READ THEM. You can make them say anything you want to so change them at will. Keep the form but make the words say how you want the company to run. Further, take the time to modify your bylaws to match your agreement with any partners. Now is the time to set up the rules, not when you have a problem to deal with.

Good luck, I hope that helps.