Do You Need a LLC to Sell On Shopify?

Are you thinking about starting an online store with Shopify? If you are, it’s a great move and a solid way to earn a living online. Whether you already have a business or want to start one – Shopify is an accommodating platform. It’s beginner-friendly and easy to figure out – even if you don’t have much tech experience. 

Yet, a common question we get about Shopify all the time is, “Do you need a LLC to sell on Shopify?”

You do not need an LLC to start selling on Shopify. You can sign up as a sole proprietor if you’re a single entity wanting to sell goods. Having said that, you’re more than welcome to register an LLC or corporation on Shopify. It’s a versatile platform available for anyone willing to venture into e-commerce

Read on to learn more about registering an online business as an LLC for Shopify. 

What Are LLCs?

First, we’ll start with a definition of what an LLC is in the first place. It stands for limited liability company, and it’s a business type such as a corporation. Yet – an LLC provides a distinct separation between the company and the owner. 

That’s why it’s referred to as a limited liability company. Since the company is its own entity – the owners have limited liability. For this reason, LLCs are one of the most popular business types in existence. They combine the flexibility of a sole proprietorship with the liability protection of a corporation. 

If you want to sell on Shopify without liability for any issues – you should consider registering an LLC. Don’t worry – you won’t need to hire a boatload of employees to do so. An LLC can be a business with a sole owner and operator. 

Why Bother With Registering an LLC?

You may be wondering why it’s worth going to the trouble to register as an LLC. After all – why not just go with a sole proprietorship instead? It turns out there are numerous benefits to forming an LLC for your business. These include:

-Build trust with future customers. Customers often view LLCs as more trustworthy than sole proprietorships. Going with an LLC can help you seem more legit in the eyes of your customers. It also doesn’t hurt that forming an LLC is a quick and inexpensive process. You won’t lose much by doing it – but you have a lot to gain potentially. 

-Increase the probability of securing outside funding. You may want to grow your business by taking out loans or searching for investors when you’re starting. Well, you’ll have a much easier time doing that if you have a registered LLC. As stated before, it boosts the perceived legitimacy of your business. 

-Protect yourself from debts and lawsuits to protect your assets. The most significant benefit of registering an LLC is the protection you gain. Since you’re separate from your business in the eyes of the law – you won’t have to worry about any lawsuits or debts incurred by the company. If you have a sole proprietorship, on the other hand, you’re 100% responsible for debts, lawsuits, and other issues. 

As you can see – it’s worth registering your small business as an LLC before getting started on Shopify. Yet, it’s by no means a necessity. You can start selling on Shopify as a sole business owner or corporation. 

Steps for Forming an LLC 

If you decide to go with an LLC – you’ll need to take a few steps to make it official. Bear in mind; certain states have specific guidelines and specifications. Do a little research to discover what unique stipulations your state may have in place. 

Generally, there are four steps involved in forming an LLC – but that will vary depending on your location. Here’s a generalized breakdown of forming an LLC. 

Selecting a Name 

The first step is to come up with a name for your LLC. That’s important for administrative purposes and your customers and investors. Your company’s name is the first impression people will get of your brand. For that reason, it’s crucial to choose a name that represents what you stand for as an organization. 

If you find yourself stumped trying to come up with a name, Shopify has a tool that can help. The Shopify business name generator is a fantastic tool that can assist you in coming up with a store name. At the very least, it can get your creative juices flowing so you can come up with an original idea. 

Once you have your name picked out – you aren’t done yet. You’ll need to vet the name online to ensure that no one else has taken it. It’s a good rule of thumb to check your state’s business directory to see if someone has claimed your name. 

Obtain an EIN

You’ll need to get an employee identification number (EIN) from the IRS website. There, you’ll need to fill out a form requesting information about your new business. The entire process takes less than 15 minutes, and it’s free. 

You will need your taxpayer identification number – so make sure you have it next to you when registering. Once you fill out the form – you’ll instantly receive an EIN. It’s like the social security number for your business. It’s how the government identifies every LLC in the country. 

Officially Register Your Business

Now that you have your EIN, you’re ready to move on to the next step – officially registering. It’s a pretty straightforward process, but there are stipulations for specific industries. Food and beverage and CBD, for example, require some extra steps in the process. Depending on what you sell, you may also need a business license. 

Start a Company Bank Account 

The final step (before building your Shopify store) is to create a bank account for your company. Trust us; it’s much easier to keep your personal and corporate finances separate. To open an account for your LLC – you’ll need to provide your EIN. Once that’s done, you’ll have an LLC that you can register on Shopify. You’ll be free to create an online store and start building your brand. 

Concluding Thoughts: Do You Need a LLC to Sell On Shopify?

Setting up an LLC is not necessary to sell on Shopify. Yet – there are many reasons you would want to register an LLC before getting started. It takes a bit of time and effort to register – yet you’ll enjoy increased protection as a result. Should you incur any debt or lawsuits during your time with the business – you won’t be liable. LLCs also boost your legitimacy in the eyes of customers and investors. If you want to see how the Shopify platform works, follow this link here to see our article.

For more great content to help you develop your Shopify strategies, check out the rest of the merchant posts on the site. If you want to see a list of our top recommended Shopify apps visit this link here.

Davon Wilson

I'm a certified Shopify expert, you can usually find me on my computer coding, or thinking about business ideas. I'm an avid Ravens fan and an overall nice guy.

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