Do you need an LLC for your small business website?

No website requires an LLC. A sole proprietor can buy a domain, publish a site and take bookings the same afternoon. The better question is whether the business behind the site should be one, and the website is usually the moment that question becomes urgent, because it is the first place your business's legal name appears in public next to a price, a promise and a contact form.

The details

In North Carolina the governing law is the LLC Act (Chapter 57D — NC Limited Liability Company Act), which has applied to LLCs since January 1, 2014. Formation is a filing rather than a ceremony: under the formation section (G.S. 57D-2-20 — LLC formation), one or more persons form the company by delivering executed articles of organization to the Secretary of State. We do not print the filing fee here, because we could not read the current fee schedule on the Secretary of State's site when this page was written; check it there before you file.

The requirement that catches owners who form their own company is the address. Under the registered-agent rule (G.S. 55D-30 — registered agent required), every LLC must continuously maintain a registered office in the state and a registered agent — a North Carolina resident, or an authorised business entity, whose business office is that registered office. The agent receives legal papers on the company's behalf. A seasonal business whose owner spends winters elsewhere needs to decide who that is before filing, not after.

Once formed, the company has a yearly duty that outlasts the excitement of starting it (G.S. 57D-2-24 — annual report required): every NC LLC delivers an annual report to the Secretary of State on the prescribed form, with professional LLCs excepted. Put it on the same calendar as your domain renewal. Both are small, both are annual, and forgetting either one causes a disproportionate amount of trouble.

Here is where the website comes in. The name on your site, your invoices and your privacy policy should match the entity that actually owns the business; the domain should be registered to that entity rather than to you personally or to your designer; and the contract with whoever builds the site should be signed in the company's name. An LLC that exists on paper while the website, the domain and the payment account all sit in an individual's name has given away much of the separation it was formed to create.

A company's website carries obligations of its own, too. The Justice Department's view is that the ADA applies to websites of public-facing businesses, whatever the legal form of the owner, so forming an LLC changes who is responsible but not what the site has to do. By default under the Act, management is vested in the managers unless the operating agreement says otherwise, which is worth settling before you hand anyone the keys to the site.

Decide on the entity first, register the domain in its name second, and build the site third. Doing them in that order costs nothing; doing them backwards means transferring accounts later.