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Why Start An LLC for My Online T-Shirt Business?

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Why Start An LLC for My Online T-Shirt Business?

Print-on-demand is a potential business, and thanks to the development of technology, this industry has grown more and more. So, if you are running a T-shirt business, there is a possibility to generate much profit, grow steadily and at the same time carry a moderate amount of risk. 

In this case, a limited liability company (LLC) is a good choice for you so that you can: 

  • Protect your assets
  • Have some tax choices that can benefit your company
  • Have the potential to grow your business
  • Gain credibility for your T-shirt business

In this post, we will give some information about what LLC means and whether you should start an LLC for your online T-shirt business. 



Definition of LLC and how we can apply it in the T-shirt business


Definition of LLC

Limited Liability Company (LLC) is a business structure offering the personal liability protection of a corporation. This business structure combines the pass-through taxation of a partnership or a sole proprietorship with limited liability. 

Advantages of LLC

LLC is a good choice for those who expand their business further due to the advantages below:

  • Personal Liability Protection. A business that is LLC can get personal liability protection. It means that your assets, such as cars, house, bank account, etc, are protected if your business is sued or in the event that it defaults on a debt.
  • Tax Benefits. An LLC company has some options to customize its tax structure, which allows you to use the best tax strategy for your business.
  • Growth Potential. LLCs provide personal liability protection and tax benefits so your business in this structure can grow in profit and risk. 
  • Credibility and Consumer Trust. In general, an LLC company can gain more trust from both banks and consumers than some informal business structures do, such as sole proprietorships. It can affect a business's marketability and ability to take out loans.
  • Increase your peace of mind. As you have much protection, you can pay attention to other areas and focus on developing your company. 

LLC Cost

The cost to apply for an LLC varies in different countries and states. In this post, we will explain the cost of becoming an LLC in the US. For other counties, we recommend you consult a legal team for more details on fees and procedures.



In the US, becoming an LLC requires the main cost, which is the filing fee. It ranges from $40 and $500, depending on your state. You can outsource a professional LLC formation service team who can help you to set up LLC for your business (with an additional small fee)

Why you should start an LLC for your T-shirt business?

In the first part, we have just shared with you some common advantages that an LLC can bring to companies in general. And now, we will come to explain some advantages in more detail for you to understand why you should start an LLC for your business. Let's discover what they are!


Limited Risk Liability for Your T-shirt Business 

All businesses, including businesses, have to face a lot of risks associated with customers. There are also other risks relating to the potential printing and distribution of copyrighted/trademarked content on print-on-demand shirts. 



For example, a partner visits your office location to discuss cooperation. However, he accidentally knocks over the box and gets a broken arm. Covering the medical damages for this accident may make significant financial burdens for your business. So, any businesses having risks need to be legally separated from their owners. 



This separation is one of the advantages that LLCs can bring: limited liability protection. 

Profit and LLC Taxes that a T Shir Business Can Have

As mentioned, the business can generate many profits, and they have the opportunity to become profitable enough to offer franchises. And any online business earning a steady profit can benefit from some flexible tax options offered by LLC.



In fact, owners of businesses can choose between the S corporation (S corp) tax or pass-through taxation. The former involves that income, deductions, losses, and credits flow through to the company's shareholders, partners, or members. Then, they report these items on their personal tax return. And the latter means that a business's taxes are literally "passed through" to the individual owners' tax. 



In general, S corp tax works well for businesses that carry substantial profit over the years, while pass-through taxation is best for those with less profit. 

Credibility and Consumer Trust For Your T-Shirt Business 



In doing business, gaining consumer trust is a key point for success. Many customers prefer to choose a store that provides enough information and has transparent company details. Therefore, if you start LLC for your T-shirt business, it is the first step to gaining your customers' trust.


 


Conclusion

Starting a T-shirt business is not an easy thing and whether you should start LLC for your company is a question you may usually ask yourself. Hopefully, this post can help you understand the benefits of LLC and make a good decision for your T-shirt business. If you have any further questions, do not hesitate to comment below, and we are more than happy to answer you.

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