Do I Need an LLC to Run an Online Business?

The Short Answer? Not Always—But You Probably Should

If you’re selling products or services online—even if it’s just a side hustle—it’s smart to ask: Do I need to form an LLC?

Legally, the answer is no. You can start an online business as a sole proprietor without filing any formal business entity. But just because you can doesn’t mean you should.

Let’s break down what an LLC is, why it might matter, and how to know if it’s the right fit for you.

What Is an LLC and Why Do People Form One?

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LLC stands for Limited Liability Company. It’s a legal structure that separates youfrom your business.

Here’s what it does for you:

Limits personal liability. If your business is sued, your personal assets (like your house or car) are protected.
Looks more legit. Having “LLC” on your business name can add credibility.
Easier taxes than a corporation. You get liability protection without corporate complexity.

In short: an LLC acts like a safety net and a badge of professionalism.

When an LLC Might Make Sense

You might want to form an LLC if:

You're selling physical products or running a dropshipping store
You’re offering services like coaching, freelancing, or consulting
You want to open a business bank account or get funding
You plan to grow and eventually hire help

LLCs are super common for Shopify sellers, Etsy shop owners, digital marketers, and even influencers. Basically, if money is changing hands, an LLC gives you a layer of protection.

When You Might Not Need One (Yet)

That said, you may not need an LLC right away if:

You're just testing an idea or hobby
You’re earning less than $1,000/month
You're not incurring major business expenses or liabilities

Start lean—but set a point (revenue, risk, or time-based) where you revisit it.

How to Get One (And What It Costs)

Setting up an LLC is easier than you might think:

Choose your state (often where you live)
File Articles of Organization with your Secretary of State
Pay a filing fee (usually $50–$300)
Get an EIN (free from the IRS) if you’ll hire or open a business bank account

You can file yourself or use services like LegalZoom or ZenBusiness to make it smoother.

Final Take: Is an LLC Worth It?

If your online business is more than a hobby—or you want to treat it like it will be—an LLC is usually worth the effort. It's affordable, protective, and makes you look more professional.

Still unsure? Talk to a local CPA or attorney to get tailored advice based on your goals and state laws.

Need Help Building a Real Business Presence?

At Hoopr Media, we help small businesses not just look legit—but be legit. From branding and websites to digital strategy and SEO, we’ve got your back.

Let’s grow your business the smart way. Reach out and let’s make it official.