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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88819
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Hello, I and my (hopefully) future business partner are planning

Customer Question

Hello, I and my (hopefully) future business partner are planning on starting an online business selling intangible property (software access). The problem is, we are unsure as to which state would be the best to use as a base location. Also, It is our understanding that an LLC will probably be our best route but we're not sure as to why that is. Seeing as how the best we have at this moment is online research and cannot afford an attourney, any help would be GREATLY appreciated! Thank you.
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

If you are not going to be selling from a store located in a particular state, then the best way to go for this type of business is an LLC in either Nevada or Wyoming. Both states have no income tax on the LLC and both states have no sales taxes. Furthermore, both states allow you to keep the names of members of the LLC anonymous and will not disclose those names. Additionally, in NV and WY the paperwork and record keeping requirements are very loose and minimal for an LLC. You can form your LLC on your own through one of multiple LLC companies in Nevada or Wyoming for about $300 and that includes them providing an address in the state for service of process.



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Customer: replied 1 year ago.


Firstly, I would like to thank you for the quick response and valuable information. Do the afformentioned companies do everything regarding business licensing and obtaining the required permits? Also, are there any major differences in selling tangible and intangible products? I read somewhere that when selling online, a business is more affected by Federal Tax Laws than by Local/State. Is this true? If so, what exactly does that mean? Lastly, do either of these states have specific limitations or regulations regarding international business/trade? I apologize for the explosion of questions.

Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your response.

The companies do everything required to set up the LLC. There are no business licenses in NV or WY, they just file the articles of organization with the secretary of state and you would apply for an EIN with the IRS for your business and that is all there is to it. The main thing these companies do is provide you a local address for service of process as required by the state laws and a mail forwarding service.

Of course you have to pay federal taxes on your income from the company. There is no federal sales tax. This is why you need to get an EIN for the LLC. The LLC is a flow through entity. The LLC files a tax return and issues the members a K-1, like a 1099 form, and the members claim their share of profits or losses on their personal income taxes.

There are no real major differences in selling tangible or intangible products online. Some states try to tax online sales of tangible items and some states exempt intellectual property from sales tax, but for right not that is not something that is an issue for you either way.

There are no limitations on international business or trade AS LONG AS you are not selling or trading hardware or software banned for export by Customs or Homeland Security.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88819
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Law Educator, Esq. and 6 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.


Thank you very much for all of your help. I can't tell you how many hours of research you saved us.

Expert:  Law Educator, Esq. replied 1 year ago.
Thank you very much. Best wishes.

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