Retail and commerce · LLC guide · updated
How to start an LLC for an ecommerce business
An online store sells to customers in many states, holds a payment processor account and ships products that can injure people. Product claims, chargebacks and sales tax liabilities belong with the company. Payment processors and wholesale suppliers also expect a business entity and EIN.
Our registered agent is optional: $74.25 a year, the same at renewal. Questions first? Ray or Vinny picks up at (954) 470-8356.
- EIN
- Sales tax permits
- Payment processor
- Product liability
- Return policy
Ecommerce Business businesses in the U.S.
Source: U.S. Census Bureau, County Business Patterns 2022 (NAICS 454110), the latest U.S. totals.
Why ecommerce business owners form an LLC
Product liability
Sellers can be named in lawsuits over products that cause injury, even ones they did not make.
Chargebacks and holds
Processor reserves and disputes hit the business account.
Sales tax in other states
Selling past a state's economic nexus threshold creates a duty to collect there.
An LLC keeps the company's debts and claims away from your personal assets when you run it as its own business: its own bank account, contracts signed in its name, and no mixing of money. It does not cover your own negligence, and lenders often ask for a personal guarantee. Insurance comes first.
Licenses and registrations for an ecommerce business
Federal items link to the agency's own page. State and local rules vary, so pick your state at the top for your state's business portal. Tick items off as you go; the list remembers your progress on this device.
- We do thisForm the LLC and get its EINAlmost every registration above asks for the company's legal name and EIN, so this comes first. We file the LLC with your state for $123.75 plus the state fee, and can get the EIN for $41.25; the IRS also issues it free online.
Insurance and taxes to plan for
Insurance
- Product liability
Covers injury claims from products you sell.
- Cyber liability
Covers breaches of customer data.
- Inventory and shipping
Covers stock in your space and goods in transit.
Taxes
- 1099-K threshold
Payment platforms report sales above $20,000 and 200 transactions. All income is taxable either way. IRS / agency page
- Inventory accounting
Track cost of goods sold properly; most small sellers can use simplified inventory methods.
Your store's reports can show sales by ship-to state. Check them monthly against each state's nexus threshold so you register before you owe tax you never collected.
Forming the LLC itself: 7 steps in every state
- 1. Check the name
- 2. Name a registered agent
- 3. File with the state
- 4. Sign an operating agreement
- 5. Get an EIN
- 6. Open a bank account
- 7. Keep it in good standing
The filing office, fee and yearly report change by state. Open your state's step-by-step guide.
What it costs to form an ecommerce business LLC
| Cost | File it yourself | With Vermilion Vitez |
|---|---|---|
| State filing fee (paid to the state) | $35 to $520 | $35 to $520 |
| Filing service, operating agreement included | $0 | $123.75 |
| EIN from the IRS | $0 | $0 yourself, or $41.25 if we get it |
| Registered agent, per year (optional) | $0 if you serve yourself | $74.25 |
State fees as charged at our checkout. Industry licenses, permits, bonds and insurance above are separate and set by each agency. Checkout shows the card processing fee before you pay.
Frequently asked questions
Do I need an LLC to sell online?
No, but most sellers form one before they get a processor account, wholesale suppliers and product insurance.
Do I collect sales tax in every state?
Only where you have nexus: your home state, states where you store inventory, and states where you pass their economic thresholds. Marketplaces collect on their own platform sales in most states.
Do I need a business license to sell online?
Usually a local business license and a sales tax permit in your home state.
What insurance does an online store need?
Product liability at minimum, plus cyber coverage if you store customer data.
How much does it cost to form an LLC for an ecommerce business?
Your state's filing fee ($35 to $520 depending on the state) plus $123.75 if we file it, with the operating agreement included. Industry licenses, bonds and insurance are extra and set by each agency.
Is this page legal or tax advice for my ecommerce business?
No. It summarizes public rules in general terms, with links to the agencies that set them. For your situation, talk to a licensed attorney or CPA, or book a free call with us.
Related industries
Ready when you are
Have us file your Ecommerce Business LLC
$123.75 plus your state's filing fee, with the operating agreement included. Checkout shows the full total, card processing fee and all, before you pay.
Rather talk first? Call Ray or Vinny at (954) 470-8356.