Do I need an LLC for a low-sales online shop?
Starting out as a sole proprietor with low sales lets you avoid the immediate costs of forming an LLC. This setup keeps things simple while your revenue is low, allowing you to convert to an LLC and potentially relocate to a more cost-effective state once your business generates more money.
What the numbers show
Counted from the threads quoted below. How we count
- This comes up 27.1× more often in r/smallbusiness than across the site as a whole.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
- 1Operating as a sole proprietor using trade names or a DBA until sales increaseDid this help you?
- 2Opening a separate business bank account to keep expenses organized while remaining a sole proprietorship until revenue increases.Did this help you?
- 3Operating as a sole proprietorship or single-member LLCDid this help you?
- 4Relying on E&O professional liability insurance instead of entity protectionDid this help you?
- 5Starting as a sole proprietorship with a local DBA and getting product liability coverage instead of waiting for an LLC formation.Did this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“Starting out to open a practice after some experience. Was surprised to read that some tax pros are legally structured as sole props. Was curious as to why? Aren't you scared of liability?”source ↗
“Im currently confused on where to begin. I'm not sure if I need to file for an LLC as a first timer.”source ↗
“I'm torn between forming a NY LLC immediately versus starting as a Sole Proprietorship (with a local DBA) for this first event, and I have a few specific concerns I'd love to get feedback on from experienced food business owners.”source ↗
“I hate that this is the hardest for me to decide right now in such a short time constraint.”source ↗
“I'm starting a company and currently have it registered in Maryland as a sole proprietorship. I'm planning to eventually relocate the business to a more cost-effective state and convert it to an LLC once I have more money coming in.”source ↗
“I want to register them as trade names as a sole proprietor. My online shop doesn't really generate much sales but I do get them from time to time. I l am not at a level where I need to form an LLC yet. Is this a good setup starting out?”source ↗
Where this came up
People with this problem also raised
- 16Should I register a business before making any money?
- 2Can I start selling before my LLC is officially approved?
- 19Should I keep going with my stagnating business or quit?
- 2Should I keep building my solo practice or take a safe job?
- 13How do I know if I should sell my business?
- 15Should I invest a lump sum all at once or spread it out?