Rito Entrepreneur, YouTuber, Digital Marketer. Founder of Flying Start Online. Dream big, make it happen, and just do what needs to be done!

Company Formation For Your Dropshipping Business (Bizathon 5 Episode19)

1 min read

Company Formation For Dropshipping Business

Today we’re talking about company formation for Shopify Dropshipping Businesses.

It’s something very important that many business blogs and websites aren’t discussing.

While we aren’t lawyers, we are going to briefly discuss certain legalities regarding a dropshipping business.

Check out the video as Rito dives into company formation of a digital asset:

Prior to launching any business, it’s a great idea to create a Startup Business Plan.

We’ll cover taxes, foreign Stripe account etc, in upcoming videos.

Today is focused on your Company formation. 

Here’s what you need to know…

If you’re based in the U.S. it’s easy to incorporate your business or simply operate as a sole proprietor. 

And because you have an assigned social security number you own the entire liability of any business you do stateside.

This includes running a Shopify store. 

Other countries allow citizens to operate as sole proprietors but the process is a bit different than the U.S.

Before we go any further, please understand, that Rito, nor myself are lawyers or accountants.

We are simply sharing knowledge based on our own experiences running online businesses.

Sole Proprietorship

A sole proprietorship is definitely the quickest and easiest way to create your business.

But it’s also the most limiting.

For instance, all liability falls on your shoulders.

Additionally, you cannot divvy up stock, add partners or sell the business should you intend on exiting in the future (you can’t sell yourself).

While Rito and I both got our starts as sole proprietors, we graduated to incorporated businesses sooner rather than later.

Private Limited (PVT LTD)

A limited company is often abbreviated to Ltd.

This structure is used mostly outside of the US.

In a limited company, directors and shareholders have limited liability for the company’s debt.

Its directors pay income tax and the company pays corporation taxes on profits.

You can sell multiple products and have multiple businesses underneath a single Ltd.

Incorporated (Inc.)

Inc. is the abbreviation for incorporated.

An incorporated company, or corporation, is a separate legal entity from the person or people forming it.

Directors and officers purchase shares in the business and have responsibility for its operation.

Incorporation limits an individual’s liability in case of lawsuit or debt.

The corporation, as a legal entity, is liable for its own debts and pays taxes on its earnings, and can also sell stock to raise money.

Like the Ltd, you can operate multiple businesses and sell multiple products under a single Incorporated entity.

Hire A Licensed Professional

If you need further help with forming your business entity, hire a professional to help guide you.

You can lookup a local CPA, utilize Rocket Lawyer, or even hire a licensed professional via Upwork.com.

This post is to acclimate you to business entity creation.

We’ll be releasing a series of upcoming posts addressing specific concerns regarding the formation of a company beyond sole proprietorship.

That’ll do it for Episode 19 – Great work!

Questions, comments or just want to say hi?

We love hearing from you in the comments below!

Success by choice, not by chance,

-David Aston


If you’re not kept in the loop via our #Bizathon definitely sign up today.

P.P.S. Click here for Episode 20!

Rito Entrepreneur, YouTuber, Digital Marketer. Founder of Flying Start Online. Dream big, make it happen, and just do what needs to be done!

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