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Let's say I have a friend who owns a factory and makes rings and necklaces according to my unique design (1000 pieces order minimum). I want to sell them strictly online, and I'm sure that I won't be making more than $100,000/year, possibly not even $50,000/year (I don't want to open a massive store chain or something like that). I would be using Kickstarter or something similar for fundraiser to start it up. Do I need to start some sort of a company for this, or can I just sell them and pay the taxes myself by the end of the year? It would be a lot less messy if I could just accept payments using Paypal or something like that, and pay the taxes myself instead of registering a company for such a low income (for a business).

The transaction would go something like this: I send that friend of mine money through Paypal or Western Union or something like that, he makes for the ordered amount of rings or necklaces, he ships a box of them to me. I buy boxes to pack them in in the meantime, and when they arrive - I pack them up myself, then print out the addresses and take them to the postal office for them to be shipped to the customers when an order is placed. I know it's a lot of messing around, but I don't have much money and I doubt my campaign will be successful as I have zero social influence or presence.

I would prefer it to not be EU-only, I want to sell worldwide.

Let's also say that I live in Sweden or Norway, but I'm not a citizen here, instead I'm a citizen of Latvia.

4

In general the primary purpose of creating a single-owner business entity is to shield the owner from liability. For example, if it turns out that (unbeknownst to you) your necklaces were manufactured with toxic metals then "you" as a seller could face ruinous liability. If "you" is a company, then you as a person might lose whatever value is left in the company, but at least you wouldn't lose your personal assets.

There are many other potential reasons to conduct business through a business entity, and many types of business entities constructed and recognized for those purposes; but they are highly dependent on the jurisdiction, entity type, and particulars of the business.

  • So basically it's to avoid any legal problems that may essentially result in losing my money, instead to lose the company's money. That's a pretty straightforward explanation. I'll choose this as best answer, unless there's something else to be added to the answer? – Jack Sep 1 '15 at 20:22
  • There's plenty to be added, but probably not without getting into the particulars of your jurisdiction, tax situation, how much you want to spend creating and maintaining the business entity -- essentially, probably not without venturing into the verboten domain of "legal advice." – feetwet Sep 1 '15 at 20:28
  • I wouldn't mind talking to someone about it, though I don't have pretty much any capital (hence actual paid advice is out of the question). That's why I'm planning to go the crowdfunding route. – Jack Sep 1 '15 at 20:53
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    @Jack: Just read up on business entity types in your jurisdiction. Usually you can figure this stuff out on your own with existing online resources, especially since you're not doing anything especially complicated or unusual. – feetwet Sep 1 '15 at 20:58

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