Sole proprietorship or incorporation - what's the best way to start?

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  • Karma:
16 Jan 10 01:36:04 am

I'm currently doing some research in niche marketing business and I'm wondering if the best way to start off would be to begin as a sole proprietor, see how much income I actually can produce first, and if I become successful, to incorporate afterward. Would this be a good strategy to cut down on initial costs? And would my business nature be considered as 'e-commerce'?



Site Admin
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  • Karma:
16 Jan 10 02:09:42 am
Hi Geoff, if it is just you involved, then setting up as a sole trader is the easiest and cheapest option available to you for sure.

The big difference between a sole trader and a company structure, apart from the cost and taxation reporting styles being different, is the liability.

As a company structure, it's the company that holds the liability, as a sole trader, it's you and only you.

e-commerce (electronic commerce) covers any online trading business, so from what you have written above, yes, you would be involved in e-commerce.

Mark (fudjj)

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  • Karma:
18 Jan 10 12:04:36 am
Hi Geoff,

fudjj pretty much said it all but do check out our Learning Centre and FAQ section for more information on the different business structures and their advantages and disadvantages.

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All the best!

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18 Jan 10 04:54:22 am
I'm no lawyer but an LLC is a good way to isolate yourself from business issues and gain a tax advantage.

An LLC works very well for older business people who no longer need to pay into Social Security ( They have maxed out their benefits.) as they can show a very low income and pay very little SSN, but still have access to the good things in life like a new car etc... , as long as they keep good records and a clear division between the LLC and their personal income.

A good way to start one is through LegalZoom. I have heard that lawyers even use the service for their clients and greatly limit their workload. Nice gig if you can get it.

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  • Karma:
18 Jan 10 05:27:53 am
Awesome! Really appreciate the comments. Thanks guys!


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