llcRecently, got a b2b idea that seems to be useful. Quite a few business people I know, expressed interest, and I’ve decided to move ahead with it. The business model is pretty simple. Companies and individuals sell their cervices to other businesses. I provide a platform for it and get a commission on every sale. Managed to put up a technical side of it fairly quickly, and now thinking about a good legal set up to start. I’m not planning to scale significantly in the next few months and want something to get to testing quickly and painlessly (money wise). Got a few companies to basically run an alpha test, meanwhile, i’ll be exploring dynamics for that market niche, best legal and accounting set up to start scaling, and so on. To accept credit card payments, I need a business entity formed. Let’s say, I start with a DBA, and when I decide that it’s time to scale - I move to LLC or Corp (which one to chose is not a question at the moment). What kind of difficulties am I going to run into? Is that a good idea at all?
You state the following:
“and now thinking about a good legal set up to start”
Please note that a DBA has absolutely no legal liability protection, you will be personally responsible for any and all debt, liabilities, etc. If you’re looking for protection from liability I’d highly recommend creating a separate entity. Depending on your state, it could be relatively cheap and worth any potential legal issues down the road.
As I’ve heard before, don’t be penny-wise and pound-foolish.
I launched my startup as an LLC for the reasons being:
Please note that this is what worked for my individual case, also note I am not a lawyer and that you should always consult with an attorney and/or CPA.
Your amount of risk and what your goals are determine the type of entity which will best serve you. Each type of entity has its positives and negatives. There is not a single entity that one size fits all. I have designed almost every type of US entity there is for clients based on what they want (no Indian or Alaska Trusts). It all depends.
A DBA doesn’t create a business, it only lets an entity use a name that is different from their legal name. So “starting a DBA” will not solve your problem of creating a business entity.
If you truly need a business to process credit cards (sounds like a good idea), and you are in the early stage of market validation, and you are by yourself (no co-founder issues, no external funding), create the simplest legal entity available to you (LLC probably).
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