If you’re starting a new business, you’ll be faced with four choices for incorporation. The value of incorporation is extremely high while the cost is relatively low. If you’re trying to get a merchant account to do your own payment processing, being incorporated is a must. The four main types of incorporations are as follows:

• Sole Proprietorship
• C Corp
• S Corp
• Limited Liability Company (LLC)

You will almost never want to start a sole proprietorship because it provides no liability protection. If your company gets sued or falls into debt you’re responsible. End of story. On the other hand, you are not a multi-billion dollar corporation so you do not need to deal with the expenses of a C Corp.

So we really only have two choices for most entrepreneurs, S Corps and LLCs. This is where things get interesting. Here’s a table I created showing their relative Pros and Cons and why I think most businesses should probably incorporate as LLCs.

Those are the major differences. In my view, you don’t want to be wasting your time with having to elect a board of directors, dealing with minutes and all the other hassle that comes with S corps. Just start an LLC as it’s easier to run while providing the advantages of being a separate legal entity.

Where to Incorporate

90% of people should get incorporated in Delaware regardless of the physical location of their business. If it’s good enough got 55% of the Fortune 500 companies, it’s good enough for you. There are numerous reasons to get incorporated in Delaware. There’s a much faster turnaround time with paperwork than most states. The fees for incorporation are also cheaper. Finally, Delaware has a court system that is pro-business.

Keep in mind that even if you incorporate in Delaware, there’s still laws you may have to follow in your own state. For example, California has a code called “long arm statute” which basically tells says that you still have to abide by their laws regardless of where you incorporated

How To Get Incorporated

Using a third party incorporation company is by far the easiest and cheapest way to get incorporated. These companies are called “Registered Agents.” There are numerous companies you can find on the Delaware Division of Corporations website. Instead of inundating yourself with 100 choices and doing nothing, I’ll just share the company I use.

They’re called Incorporators USA, LLC (an LLC, imagine that) and for a few hundred bucks, they did all the heavy lifting for me.  They took care of my EIN, IRS tax stuff, certificate of incorporation, and act as my registered agent.

If you’re still confused about the process, checkout the IRS website. Just don’t get lost down a dark hole and end up doing nothing. Get it done and move on.

If you google “e-commerce websites” you’ll find somewhere between 1,000 – 10,000 different options. This can be so daunting that it often leads to the paradox of choice – you don’t do anything. Instead you end up hitting the back button to Hulu so you can watch the Daily Show. Fun, but not productive.

When I first started my e-commerce business, I decided that I wanted a fully customized shopping cart so that I could cut down on lost conversions. I first tried to get two different developers to implement everything I wanted. This ended in missed deadlines and mixed results. I thought that by customizing the process, I could get everything I wanted. Instead, I ended up feeling like my customized solution was trash.

Then I spent a couple of days researching what platform fit my needs the best and I came up with a solution. It doesn’t do everything I want. It does about 85% of the stuff I need it to do. And since I’m relatively lazy, 85% is more than satisfactory.

I’d wager that for 90%(1) of the people looking to start an internet business, an all in one solution is best. What I mean is that you’d want to get your domain name registration, website hosting, merchant account, secure and customizable shopping cart, ability to take visa/amex/mc/paypal, 24/7 support, anti-hacker trust logos, etc…. from the same company. It’s a lot less stress and that way you don’t worry about what you didn’t do, since they give you a package that takes care of everything right out of the box.

Out of all the options on the market, I think Yahoo Small Business is the way to go. They provide all those basic but necessary services at $40 bucks a month + 1.5% transaction cost on the revenue of each sale. Now if you were doing $100K+ in sales a month, then 1.5% is HUGE! You’d be better off diversifying your needs and saving more money in the long run. But for most people, it’s worth it. My first internet business in high school was run through Yahoo’s platform. They’ve since made numerous upgrades and additions, and I think they’re the clear choice if you don’t want to spend a week figuring out what merchants accounts, SSL Security Sockets, and all that other E-commerce stuff means. It takes about 30 minutes to setup an account. In a few days you’ll get all your how-to guides in the main and it’s really easy to integrate their shopping cart onto your webpage.

While the 1.5% transaction cost is fine for most small businesses, for me, it’s a deal breaker. So instead I have my own merchant account and payment gateway and opt to use a shopping cart platform. After looking at the choices on the market and testing a few out, I now exclusively use 1shoppingcart.com, which is owned by Web.com so it’s pretty damn secure. I choose them because I needed to do recurring billing along with mailing list management. They run about $30 a month with ZERO transaction fees.

The cart is very easy to integrate into your existing webpage (just copy past one line of code and tweak the shopping cart to match your page). Plus, I like that their shopping cart is simple and straightforward, a necessity if you want to ensure that people actually checkout instead of abandoning orders in the cart. Most sales are lost because of a complex cart (actually somewhere around 30%-50%) because they that require customers to give out way too much information. That’s a gigantic loss of revenue that can be mitigated through having a streamlined shopping cart so that consumers have less anxiety when checking out.

Based on my personal experience, I think you should avoid having a customized cart designed. For one, there’s no technical support when your cart goes down. The designer’s done as far as he’s concerned, unless you want to pay an expensive retainer. Oh yeah, don’t forget the cost ($350-$2,000)+ a year for high quality SSL security in additional to the development fees. You also have to trust in the reliability of your designer, somebody you’ve never met…

You should also avoid free shopping carts/platforms like the plague. The two most prominent are Zencart and OScommerce. Although they can work for some merchants, a huge downside is their lack of technical support. If you need help you’ll have to visit their forums and subject yourself to tbe mercy of nerds. I hate doing that. ZenCart & OSCommerce are usually easy to setup, but forget about doing ANY customization. The checkout process usually has numerous pages and forms to fill, leading to huge abandonment issues. In my experience, I was losing 50% of my sales through abandonment in the cart issues running Zencart. Pay the extra money and get a real e-commerce package.

Lastly, you can also try Google Checkout, Paypal’s checkout and other 3rd party that’ll use their merchant accounts for you, but I don’t totally recommend them. What I love is that they’re secure, easy to setup, and inspire confidence in the security of the transaction by their brand. But that’s where the love ends. First of all, I hate interrupting the customer experience and increasing friction to buy by redirecting somebody off my website. Consciously or unconsciously, the potential customer will think your business is untrustworthy and your conversion rate will go down. I would hate for that to happen to you. Unless you were my competitor. A third party payment processor can create unnecessary customer anxiety and abandonment of sales. They also have higher transaction fees (3-5%) to justify the fact that they are servicing your account for you. The only reason you might want to use them is if your credit is so bad that you can’t get your own merchant account, or if you’ve been blacklisted from getting a merchant account. But at that point, perhaps you should work on your personal financial situation before starting a business.

(1) Based on intuition and absolutely no scientific evidence.