Forums: Discussions for entrepreneurs and small business.

I want to start an online business selling a product and need a reseller tax ID# to buy from a wholesaler, however do not want to get this under my own name.  As such, I will form a business either an LLC or Incorporation.  Since it`s an online business, does it really matter where I incorporate or form the LLC in the USA?  ie. the business will be located virtually (since most products will drop-shipped).  Also, for a start-up online business, does anyone recommend LLC over incorporation?  I am located in California and had heard good things about Nevada and Wyoming.  I want to avoid California since they have a mandatory franchise tax of $800/year even if my sales are zero!

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http://www.slowcookermate.com
http://www.twitter.com/yslowcook

Because you are in California you will be required to pay the CA state taxes no matter where you file your Inc.  And as SlowCookerMate says, the LLC taxes in CA are insane.  For that reason I recomend that most people in CA either work as a Sole Proprieter, or an S Corp.  As an S-Corp you are still stuck with the $800 minimum tax, but your are not subject to the LLC taxes on gross receipts. So if you must from an LLC or Corp, just do it in CA. It will save you tons of Paperwork.

If you just don`t want to use your own name you can file for a DBA in the county where you live/work.  Then apply for a Federal Identification Number for your DBA. Then apply for the resellers permit. You will still need to give your personal info for the FEIN and the resellers permit, but to your vendors you can use your business name.

Good Luck!