Getting a Business Address for Your Online Store [What to Know]
Small business growth since the advent of the COVID-19 pandemic has been dramatic. The number of new business filings shot up 20% in 2020 (over 2019) and another 35% in 2021. At the same time, the volume of e-commerce sales skyrocketed during the pandemic and has continued since. E-commerce sales hit $820 billion in the U.S. in 2021 (or 13.2% of all retail sales in the U.S.)—a 14.2% increase over 2020 and 50.5% jump over 2019. 43% to $815.4 billion (from $571.2 billion in 2019).
Registering an Online Store as an LLC or S-Corp
The number of e-commerce sites globally today is estimated to be an astounding 12 to 24 million. Most are small businesses; fewer than 1 million of them sell more than $1,000 annually.
As with any small business owner, the owner of a new online store must register their business with their state. Registering as an LLC or S-Corp—or even a Corporation—provides an online store with personal liability protection. This prevents creditors from going after an owner’s personal assets. Registering an online store also enables pass-through taxation, whereby business income or losses are recorded and taxed on the owner’s personal tax return.
Why Online Stores Should Not Use a Home Address
When registering your online business, you must provide a physical mailing address. Many online shop owners simply use their home addresses. But is this a good idea? The answer is a resolute no, and there are a number of reasons you should think twice before doing so. Instead, you need to get a business address for your online store.
Your Private Residence Becomes Public
When an online shop owner registers their business using their home address, it becomes public and accessible to customers and the general public. Customers can show up unexpectedly at your home, interrupting family activities, work, and more. They also can show up when you’re not home. And while the vast number of individuals have good intentions when they come to the home of a business, not all of them do; mentally ill customers—or others—can come to your door at all hours of the day or night. Finally, criminals also can retrieve personally identifiable information (PII) about you and your online store—using this information to steal your identity and hack into your accounts.
When your home address shows up as the location for your online business, customers will associate it with your business brand. Using a home address can be concerning to customers, who may doubt the legitimacy of an e-commerce store that lacks a business address. Additionally, for online shop owners with home addresses in questionable neighborhoods, similar concerns about business legitimacy can arise. With impressions and seconds critical in the case of e-commerce transactions, listing of a home address can impact the likelihood of an online sale.
Using a home address when registering a business can create legal risks—which ironically is one of the foremost objectives when an online shop owner registers their business. While many may assume that their assets are protected when their business is registered as an LLC or S-Corp, that isn’t necessarily the case. A court can deem that business and personal activities are intertwined due to the use of a home address—resulting in the loss of the protections of an LLC or S-Corp filing. If this happens, the owner of an online store can be responsible for legal and financial obligations—debts, fines, and penalties.
Prevented by Local Ordinances and HOA/Housing Regulations
Sometimes you cannot use a home address because of local ordinances and homeowner/housing regulations. Some HOAs prohibit residents from using home addresses for business purposes. Condominium and apartment communities often include policies in their lease and agreements that also do the same.
Degradation of SEO Rank
If an online store cannot be found in internet searches, it will not remain in business long. When an online shop owner uses their home address for their business, their SEO rank and search results diminish—and this includes Google My Business listings.
Getting a Virtual Address for Your Online Shop
The good news for online shop owners is getting a business address is easy. Virtual addresses through providers like Davinci Virtual Offices is simple and fast. Finding the right location or locations is the starting point. It might be that an online shop owner can build greater credibility if they list multiple business addresses on their e-commerce site. Providers like Davinci Virtual Offices offer virtual address in thousands of locations. Each includes a listing in the lobby directory and access to coworking space, day offices, and rented meeting rooms.
In addition to the above, Davinci Virtual Offices includes entity formation services that make it easy for a new online store owner to register their business. This includes tracking and storing Service of Process (SOP), official notifications, and compliance deadlines—as well as receipt alerts when documents are received.