One of the primary benefits of doing business online is scalability. You devise something that works and simply replicate it to reap increased profits. One of the seldom discussed dangers of online activity is the scalability of liability. In the bricks and mortar world each transaction is typically a little different. The transactions also come at a much slower pace. The benefit is that if you inadvertently do something with the potential of getting you in legal trouble, you can stop the hemorrhaging before it gets out of hand and repair the damage associated with the limited number of transactions. Online, liability expands with the rate of transactions. Often the transactions are so fast and numerous, that by the time you are aware there is a problem, the damages are astronomical.
If the liability is too large, there may be nothing you can do to protect your business, but there is something you can do to protect your personal assets from being taken. By incorporating, or forming a Limited Liability Company, you may be able to drastically decrease your exposure for much less time and money than you might think. Another advantage relates to the on-going existence of the company. If an owner of the company dies or wishes to sell their interest, the corporation can continue to exist and do business. If an owner of a Sole Proprietorship or Partnership dies, generally the business or partnership also terminates.