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I am a new entrepreneur and I am approved for a $60,000 goverment grant. I am starting an online electronics shop in Indiana, and I am trying to figure out (along with many other things) what the best business structure would be for me as a beginner. LLC, DBA, sole-proprietorship etc.?

I am totally new at this whole business thing and any help I can get would be greatly appreciated.

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You need to talk to a lawyer and accountant about this and get specific advice for your situation and business –  Susan Jones Feb 28 '12 at 22:58

2 Answers 2

It really depends on your end-goal for the enterprise. If you want it to be a lifestyle business that is closely held and has only a few owners (or just yourself), then you could do the LLC. But if you can imagine it growing beyond those limits, I'd suggest going S-Corporation to start with, and then later you can convert to C-Corporation when it becomes appropriate to do so. The LLC and S-Corp have the limited liability protection (as long as you follow the proper practices) that is lacking in a sole proprietorship. They both also avoid the double-taxation issue of C-Corporations because they are pass-through entities.

To my knowledge there is no legal requirement to buy insurance for an online anything except whatever might be imposed by your payment gateway... I'd be shocked if Indiana imposed something more, but you could contact the local Small Business Administration and they can likely get the question answered for you, or point to resources that would answer this. Again, I find it hard to believe that there is a legal requirement for this.

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Very good, and thank you. I did not know if there were any legal requirements for an online business but I knew that somwonw reading this would know. I will hire one employee, and have a vehicle under the business so I may have to get insurance to start with. Thank you for your answer ttongue. –  Brandon B. Oct 12 '11 at 14:45

For this sort of thing, I usually set people up as an LLC, taxed as an S-corp. The LLC part allows you to avoid a lot of formalities, such as issuing stock certificates, having annual meetings, etc.... The S-corp means that it's possible to keep some of the income from being subject to employment taxes. But, you need to discuss the specifics either with an accountant or a tax-knowledgeable attorney.

You should also check the terms of the grant to make sure there aren't any restrictions on what you can do. Sometimes, there are.

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