Starting Your Online Business – Creating Your Business Entity


First Steps To Starting Your Online Business


The basics of starting your online business are pretty much the same as they are for starting a business offline. If you've started a brick & mortar business you shouldn't have much hassle.

If this is your first entrepreneurial endeavor you need a knowledge of the basic steps that must take place in order for your business to stay out of trouble with the powers that be.

This message begins an explanation of those basic steps, so anyone starting an online business has the know how to get off the ground, and growing in the shortest time possible.

Hopefully you'll find a lot of value in what I'm about to give you.

I'll start with the initial declaration of your business as I think you wouldn't bother to read this if you hadn't already decided to become an entrepreneur.

Every business exists to make a product sale of some sort. Typical product types include a service (swimming pool maintenance, automotive service, counseling, transportation, etc.), training courses, physical products, and digital products.

Online marketing works for all of these product types.

You sell your product online with a technique we call Internet Marketing (IM). The activity of IM is a huge area of processes, and not within the scope of this message. I'll write about those processes in the future.

Before you start your marketing efforts your first step is create a business entity.

A business entity is a thing that you form and administer in compliance with commercial law in order to engage in business activities, charitable work, or certain other activities.

Most of the time, business entities are formed to sell a product or a service.

There are many types of business entities. The definitions, and registering requirements vary in the legal systems of each state in the U.S. These include sole proprietorships, DBA, partnerships, limited liability company, corporations, and other specifically permitted and labeled types of entities. Countries outside the United States have different designations for their business entities.

As I'm not a business law professional Please be advised that what you read here is basic, and for information purposes only. I DO NOT advise as to adherence to any laws. I strongly recommend that you consult a business law professional when deciding what form your business will take so you don't violate what's required in your location.

The name you give your business is a name you make up, and use to perform your business activities.

Companies often use trade names to conduct operations under a simpler brand as opposed to using the formal name for all public communications, or when a wanted name wasn't available for registration by the business operator, or if that business is owned by a separate company, franchisee, or a sole proprietorship.


Sole Proprietorship


A sole proprietorship, also known as the sole trader, or simply a proprietorship, is a type of business entity that one natural person owns and operates. There's no legal distinction between the owner, and the business.

The owner is in direct control of all elements, and legally accountable for the finances of the business. This normally includes the business debts, loans, losses, and other responsibilities.

The owner receives all profits (subject to taxation specific to the business). Every asset of the business is owned by the proprietor.

A sole proprietor may use a trade name or business name other than his, her, or its legal name. He will have to legally trademark that business name.

Under most circumstances the sole proprietor entity is the simplest to register.


Doing Business As, or dba


The distinction between a registered legal name and a "fictitious" business name, or trade name is important. A business with a fictitious name gives no clear indication of the true identity of the entity that's legally responsible for the operation, and obligations of that enterprise.

Fictitious business names aren't legal entities in and of themselves. They're only names that existing persons, or entities, refer to the business as.

The registered legal name of the business or owner makes legal agreements – not the trade name. And the legal name must be used whenever a business sues or gets sued.

The United Kingdom, Ireland, South Africa, Australia, New Zealand, Hong Kong, and Zimbabwe, (along with certain states in the U.S.) use the term “trading as” (or t/a) rather than dba.




A partnership is an arrangement where two or more parties, known as partners, agree to form a business for their mutual benefit.

The partners may be individuals, business entities, or a mixture of the two.

Organizations may partner together to increase the likelihood of each achieving their goals, and to extend their reach.

A partnership may result in the members holding equity, or may be governed solely by a contract.

Partnerships often involve the various parties with complex negotiation, and special challenges that must be sorted and agreed to up front.

Some of the issues to consider include:

  • Overarching goals

  • Levels of give-and-take

  • Areas of responsibility

  • Lines of authority

  • Rights of succession (Chain of Command/Leadership)

  • How success is evaluated and distributed

Just to mention a few.

After reaching agreement, civil law normally enforces the partnership, especially if well documented.

If the partners want explicit and enforceable agreements they do so with legal Articles of Partnership.

One essential component of a partnership is trust, as there's no way to expect the parties to include in their agreement every future event, or obstacle that will show up.

It's common for information about formally partnered entities to be made public, such as through a press release, a newspaper ad, or public records.


Limited Liability Company (LLC)


A specific form of private limited company in the United States is the limited liability company (LLC).

LLC is a business structure that combines the pass-through taxation of a partnership, or sole proprietorship with the limited liability of a corporation.

An LLC is not a corporation; it's a legal form of a company that gives limited liability to its owners. There's no requirement for LLCs to organize in order to make a profit.

In certain U.S. states (for example, Texas), businesses that provide professional services requiring a state professional license, like legal or medical services, are prohibited from forming an LLC, but may be required to form a very similar entity called a professional limited liability company (PLLC).




A corporation is a company, or group of people authorized to act as a single entity (legally a person), and recognized as such in law.

Incorporated entities originally got establishment through a charter (i.e. a grant awarded by a governing body). Now companies become incorporated through registration of their business entity as a corporation.

Corporation types vary, but are normally considered one of two kinds: the company can issue stocks or not, and the company is operating to make a profit or not.

Shareholders own legal corporations. Their only liability in relation to the company is the investment they have in the stocks they buy. Shareholders don't manage the company, but they do vote for individuals to sit on a board of directors to handle the management for them.

The majority of governing bodies consider the corporation as a legal person, and place on them the same rights and responsibilities of a human being.