Online Business Through Wyoming Company
When opening a new business and choosing the most suitable type of entity, you must consider two issues: limited liability and taxation. When starting an online business, the optimal choices in terms of business entities are corporations or limited liability companies. Both entities have limited liability, which means that once the shareholder has made their investment in the company, they have no further obligation with respect to the entity’s debts. They are protected against lawsuits pertaining to debt, but other legal action may be taken against them in spite of this.
On the other hand, a sole proprietorship and a partnership are taxed on an individual basis. Corporations are taxed as separate entities apart from the individuals who run the company, and usually face a higher rate. Corporations are taxed twice: once as a corporation, and once again when profits are distributed to company shareholders. In the 1980s, the first limited liability corporations (LLCs) were formed in the states of Wyoming and Florida, and since then the LLC has become the most popular business entity in the United States. An LLC is a limited liability company that is taxed as a partnership, so it retains several advantages over a corporation in terms of taxation.
There are four types of business entities in the US
- sole proprietorships
- partnerships
- corporations
- limited liability companies
Starting an online business is similar to forming a regular business. You must choose a business structure, decide where to start your business, choose an appropriate name, obtain a domain name for your site, file your business formation papers, figure out how you are going to finance your business, understand tax requirements and licensing requirements for your business, and finally set up your business’s website.
Sales Tax
Online businesses are required to follow the same federal, state, and local tax laws as regular businesses. Online businesses are responsible for the collection of state and local sales taxes from their customers (when applicable). Differences in the rate of sales tax amongst states can influence consumers to buy products across borders or online. The five states with the lowest average combined rates (state plus local taxes) are Alaska (1.76 percent), Hawaii (4.35 percent), Wyoming (5.40 percent), Wisconsin (5.42 percent), and Maine (5.5 percent).
More information is available at: https://taxfoundation.org/state-and-local-sales-tax-rates-in-2017/
Online Business Rules
Any business that collects personal or financial data either through online sales, credit reports, or applications should understand the rules and regulations of the Federal Trade Commission pertaining to e-commerce activity. The Federal Trade Commission, or FTC, is the primary entity responsible for regulating the e-commerce sector.
If your business has a physical presence in a state, such as a store, office, or warehouse, you must collect the appropriate state and local sales tax from your customers. If you do not have a presence in a particular state, you are not required to collect sales or local taxes. In legal terms, having a physical presence in a state is known as a “nexus.” Each state defines the term nexus differently, but all states agree that if you have a store or office, a nexus exists. If you are uncertainwhether or not your business qualifies as a physical presence, contact your state’s revenue agency to confirm.
For most small businesses, it is best to file formation documents in the state where you are currently located. By doing this, you will avoid the added costs of having to register to conduct business in your home state and having to hire an out-of-state registered agent. However, if your business has a significant nationwide presence, or you wish to attract venture capital, you may consider incorporating in Wyoming. The reasons to form a business in Wyoming are as follows: Wyoming has lax business regulations and taxes, and Wyoming also has one of the lowest filing fees for registering a new business. These two facts make Wyoming an extremely friendly and cost-effective environment for starting your new business.