What is correct legal structure for an internet business?

Asked about 5 years ago - New York, NY

Hello,

I am considering starting an online business venture. The venture would provide travel reccomendations for clients. I am concerned about limiting my personal liability and want to create the website in the correct manner so that I am not personally liable for the actions of the website company. What is the best corporate structure to operate my internet business under? I am most concerned with personal liability protection. I will be the only employee for the website at this time.

Also, I plan to use a website hosting company in order to build and host my site. Should my account with this hosting site be registered to my company? What if I already started building the site on an account linked to my personal name. Will that be commingling of personal assets since the w

Attorney answers (1)

  1. Michael A Aisenberg

    Contributor Level 7

    Answered . Your question has less to do with the Internet and more to do with corporate form, tax structure and New York corporations law. New York is a very plaintiff-friendly jurisdiction on consumer and privacy issues.
    A New York business lawyer can help you get started, and should advise you alomg the following lines:
    (1) Consider creating one or more business nexi (office space, mail box, domain name service address) and establishing your venture in a tech-business friendly state, such as Virginia. The Virginia LLC statute is well coordinated with Sub-chapter S of the Internal Revenue Code, for income tax considerations, and is very even handed re: liability. Even if you stay in New York for this venture, try to go outside of NYC to a jurisdiction without the additional burden of a city tax.
    (2) Consider a partnership or joint venture with an existing travel agency (without and Internet presence) in the jurisdiction you choose.This is a quick and strong basis for going outside of NY to establish the Internet venture, and would give you access to travel industry expertise you may not have, as well as potential client lists.
    (3) Reestablish your web-hosting account under your venture.
    (4) And make sure you establish separate banking, insurance (you need at a minimum a general liability policy), mail, domain name, email, subscriptions and other services accounts under the venture. Your recognition of "commingling" is the key, because the strategy of a plaintiff in any suit against your business is to "pierce the corporate veil" and try to establish PERSONAL liability against you and your assets. You, therefore should take careful steps NOT to commingle. The fact that you are the only employee is not a substantial issue; someday, you may have 10 employees; it's how you conduct the business--as a personal activity indistinguishable from your personal affairs or other activities, or as a clearly separate entity, with separate CORPORATE or LLC identity.
    This should get you started down a path towards a well constructed Internet business.

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