How to Set Up an Online Business – Structure and Legal Aspects

Setting up your own business will always give you some important matters to think and study about. Businesses have different structures that you must be familiar with. This applies to both putting up your business in your actual community and having it on the internet world. Along with business structures come legal issues that you have to deal with at the present time or in the future. So this is one fundamental truth in knowing how to set up an online business.First, let us talk about business structures.1. Sole-Proprietorship. A very common business structure. This simply means that you own the business and nobody else does. All the assets and responsibilities came from you.2. Partnership. Just from the name itself it tells you that a business is owned by two or more people. These people who agreed to be partners will share profits, losses and liabilities etc at all times.3. Corporation or Limited Liability Company (LCC). It is a fresh concept of business and a much more complex structure. Amazingly, this is recognized by the law as having the same rights and responsibilities of a real person. Therefore, this kind of business has its own tax to pay and complexities to handle. Especially, there’s the double taxation problem. If you are wondering what’s with double taxation, it means that you have to pay tax on both the profits earned by your corporation and the income you gained as an individual. Aside from this, your corporation needs to pay a yearly tax on all outstanding shares of stock.4. S Corporation. It is similar to LCC but doesn’t have double taxation. The Internal Revenue Service (IRS) allows this kind of corporation to be taxed as a “partnership” and not as a corporation. But, for you to have the S status, your business must achieve the 3 prerequisites proposed by the IRS. Number 1: limited number and type of shareholders in the business. Number 2: limited stock issued. Number 3: limited sources of revenue.The aforementioned different structures hopefully give you an idea on what business concept suits you best.Next, let us talk about legal issues concerning how to set up an online business. Frequently asked questions when it comes to putting up an online business are: “When do I need a lawyer?”or “Are the legal aspects still the same for old-fashioned businesses and online businesses?”. Let us find out.As mentioned earlier, there are different structures you can choose for your business, and when it comes to deciding what structure you want certain legal matters need to be addressed. Say for example, you decide to have a corporation. In this case, you have to know the legal benefits as well as tax implications of your business. Remember the difference between LCC and S Corporation? Well, that’s what we’re talking about.There are also other factors you should consider, like patents, trademarks, and copyrights. You have to be careful because intellectual property is a domain you should be aware of when building a business, and it’s even more important when you want to learn how to set up an online business. For instance, you have to be careful while choosing a website address for your business’ online presence. Make sure not to use a copyrighted or trademarked phrase. Always aim for originality!Next are licenses and contracts. If, by any chance, you are about to sign a contract or other physical document never sign without reading it. I know that it might sound like an obvious advice, but tell me, when was the last time you read the iTunes license agreement before hitting the “I Agree” button? Exactly. If you do not clearly understand what the terms and conditions are regarding the contract, or if you have any doubts whatsoever, then you have to call your lawyer and ask for assistance.Last but not least, it’s good to get some knowledge regarding internet specific law. You can find lawyers specializing in such a field widely in your state. But just to give you an idea on what this is about, internet specific law is a field that covers not only the issues of intellectual property, but also legal matters that deal with domain name licensing, trademark violation or infringement of such right, “cybersquatting” (which means the illegal registration and use of a domain name based upon another registered trademark) and all other legal problems that are found online.Now you know some facts and important considerations that you have to remember when you want to learn how to set up an online business. After you make the decision on what business structure suits you best you can start working on the business itself, which is the real fun part.