How To Start An LLC For Online Business 2024?

How To Start An LLC For Online Business (1)

Forming an LLC for your online business could help you reduce personal liability and protect your personal assets. You may also be able to take advantage of new tax laws for business expenses and state taxes by forming an online LLC.

But it’s not always clear how to form an LLC – especially if you’ve never run online businesses. That’s why we’ve created this guide. It covers everything you need to know about turning your online business into an LLC in as little time and with as little money as possible. Keep reading to learn more.

What Is An LLC For Online Business?

The first thing you should know is what it means to form an LLC. LLC is an acronym that stands for limited liability company. It’s a type of business structures that online business owners can use, just like opening an S corporation or running a sole proprietorship.

Each state sets its own requirements for forming an LLC. But they’re usually as simple as filling out an LLC operating agreement or articles of organization and paying a few filing fees. That means that you can take advantage of the LLC business structure almost regardless of where you conduct business and file taxes.

The Benefits And Drawbacks Of Using An LLC For Online Business

There are advantages to owning an LLC as compared to running an S corp or being a sole proprietor. But there are also some downsides that you should know about. We’ll highlight each in this section.


The biggest advantage of turning your business entity into an LLC is the change in legal liabilities LLC members will get from doing so. By forming a manager-managed LLC, you get liability protection for your personal assets. In other words, if the business fails, you can’t be held personally responsible to the point that your home or personal bank account could be seized. That’s not always true if you run a sole proprietorship or S corporation.

Another advantage of turning your S corp or sole proprietor business into an LLC is savings on taxes. Many state laws provide tax benefits to LLCs, so you could end up paying less in income and sales tax or even franchise tax in your home state. But you should check with your state’s secretary website to learn more.

Finally, there’s also a reputational advantage to forming an LLC. Having LLC in your business name can make your company appear more legitimate to customers, lenders, and regulatory bodies. It could help you secure business loans and business licenses while also winning new customers.


The biggest drawback to making your business official with an LLC is the cost associated with doing so. Your filing fee will vary from state to state, but some places have a filing fee that’s several hundred dollars or more. There are also annual fees to consider, which can vary depending on where your LLCs file articles of organization with their state’s secretary.

When you form an LLC, it can also reduce your flexibility a bit. Single-member LLCs will be largely the same. But if you have a multi-member-managed general partnership LLC, your business profits will need to be shared in accordance with the LLC operating agreement and legal documents you file, which could make change a more time-consuming process.

What Are The Tax Benefits For An LLC Online Business?

The biggest tax benefit for running an LLC is something called pass-through deduction, which was created by the Tax Cuts and Jobs Act. It lets an LLC owner deduct up to 20% of business income when filing income tax returns. You may be able to save even more than that by selecting S corp tax status for your LLC. But there are pros and cons to being an S corp that you should consider before making the decision.

You may also be able to save on franchise tax and income tax in some states. Other states may have more favorable business expense deductions in addition to helping with franchise taxes. It will all comes down to the state you file your registration documents in.

How To Form An LLC For An Online Business? Steps By Steps

How To Start An LLC For Online Business (2)

Forming an LLC is a relatively straightforward process, which most business owners should be able to do without professional help. However, the various forms that you need to fill out and the information included in them can vary.

But with that being said, here’s a step of basic step-by-step instructions that you can follow to form an LLC no matter where your business is located.

Visit your state’s website to find the right forms

The first thing you should do is go to your secretary of state’s website. This is typically where you will find the various form requirements that you need to fill out and submit in order to become an LLC.

You may need to fill out articles of organization, an LLC operating agreement, and an additional form or two depending on your state. You may also need to provide basic information about you as a person while you form your LLC.

Fill out and submit your operating agreement

The next step is to fill out the forms that your secretary of state requests for new LLCs. You will have to provide information like your preferred business name, employer identification number, and any business license you may already possess.

You will also likely need to include a registered agent, which is a person who acts as a point of official contact for your company. There are legal services that can do this for you if you don’t want to do it yourself. We highlight some of those below in the next section.

Read More: Best Registered Agent Services 2024

Respond to requests for additional information

Once you submit the required forms, the secretary of state will review them. At this point, they may realize that you want a business name that already belongs to someone else. Or maybe they’ll find a mistake with a business license or employer identification number. If any mistakes like these are found, the secretary of state will get back to you and ask you to make the required changes.

Run your LLC

Once you’ve fixed any problems that may have popped up with the Trademark Office or IRS website, you’ll get an approval notice stating that your LLC is officially in business. Now all that’s left to do is follow any ongoing LLC requirements set by your state, such as annual reports. That way, you can continue enjoying all of the benefits your LLC offers for years to come while avoiding double taxation and excess fees for a registered agent’s mistakes.

Top 2 LLC Services

You can typically form an LLC on your own. But there are professional services that can help. These can be valuable when you don’t want to spend the time to do this yourself or you’re just looking for a little guidance with things like sales tax and choosing a business name.

If you’re interested in hiring an LLC formation service, these are two of our favorites.

ZenBusinessNorthwest Registered Agent
AwardBest OverallMost Affordable
Price$0 – $299 + state filing fees$0 – $225 + state filing fees
DetailRead Review Read Review

Visit Website

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ZenBusiness can help you with most aspects of setting up a new LLC, from filling out and submitting the required paperwork to opening a business bank account and setting up practices that will help you avoid having to hire a law firm in the future. The company does it all and can be a wonderful ongoing partner to have as you work to improve your business.

Northwest Registered Agent

Northwest is very similar to ZenBusiness in that it can also help you choose a business name, fill out the required paperwork, and provide ongoing support that helps you take advantage of everything the LLC offers. They’re a bit more affordable than ZenBusiness but offer slightly fewer services.

Tips to Maximize Benefits for an LLC for Online Business

If you want to turn your business into an LLC, there are certain steps you can take to maximize the benefits that you get. One of them is to hire a professional service provider or law firm.

Hiring a professional will help you consider all eventualities while you turn your business into an LLC. They can work with you to identify your biggest opportunities for tax savings and asset protection, which you may not have discovered on your own.

It can also be helpful to look up LLC formation guides online that are specific to your state. Remember, every state has its own requirements, benefits, and potential drawbacks when it comes to LLCs. Reading a state-specific guide can provide you with a more detailed look at what factors may impact your LLC formation process and how to come out on top as you go through them.

Final Thoughts

The bottom line is that it’s easy to set up an LLC for your online business, and doing so can benefit your company in numerous ways. Whether you decide to set the LLC up yourself or you want to hire a professional service, we wish you all the best moving forward.

Frequently Asked Questions (FAQs)

How do you set up an LLC for an online business?

The process is as simple as visiting your secretary of state’s website, choosing a business name, and filling out the proper forms. You may have to pay a filing fee as well.

How much does it cost to start an LLC?

It depends on the state you live in, as each state sets its own filing fee amounts for LLC paperwork.

Should my company turn into an LLC?

That depends on your goals and preferences. LLCs can help you save on taxes and protect yourself from personal liability. But they also may have ongoing expenses and could limit your flexibility as a business owner to a degree.

Why should I start an LLC?

The best reason to form an LLC is that doing so will protect you from having personal liability in the event that the company goes under one day.



Bizreport - Kellan Jansen
Kellan Jansen, BA
Business Writer
Kellan works with businesses of all sizes to help them achieve their growth goals and has won several awards for his work in the space. He is especially focused on the fields of business finance and the developing cryptocurrency industry, regularly writing about both for audiences across the globe.


Kristina Knight-1
Kristina Knight, Journalist , BA
Content Writer & Editor
Kristina Knight is a freelance writer with more than 15 years of experience writing on varied topics. Kristina’s focus for the past 10 years has been the small business, online marketing, and banking sectors, however, she keeps things interesting by writing about her experiences as an adoptive mom, parenting, and education issues. Kristina’s work has appeared with, NBC News,, DisasterNewsNetwork, and many more publications.

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  3. Apply for licenses and permits. Apply for licenses and permits. Published 2020. Accessed June 8, 2023.
  4. IRS. Partnerships | Internal Revenue Service. Published December 7, 2021. Accessed June 8, 2023.
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