Home Forums New here? Share your story What’s the best business structure for drop shippers

  • This topic is empty.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
  • #1000265
    • Total posts: 14

    Hi I’m looking to set up a little side business to my day job, I have identified a niche market for a product to drop ship, I want to set up the correct business structure to ensure I protect my personal assets from any very slim possibilities of being sued as a result of the business going sideways….
    My idea (product that is already manufactured widely in China and be customised to my design to meet my mkt niche) may take off and do very well, on the other hand it may amount to nothing
    What do other drop shippers setup their business as…. is a company the best bet or does that cost thousands to set up….
    Or do you setup as a sole trader and hope you don’t ever have to face a possible lawsuit / get sued…..
    Or do drop shippers not consider this and run care free into the wind……
    (Sorry I’m new to this)

    Dave – FS Concierge
    • Total posts: 2,526

    Welcome to the forums [USER=118255]@boots72[/USER]!

    Great questions – hopefully someone can help. :)
    Keep in mind there are a range of other protective measures to consider, including insurance, using a supplier you trust, and of course your choice of product.


    Jason Ramage
    • Total posts: 3,160


    Lack of replies could be due to what you appear to be trying to achieve (mitigating responsibilities) although Dave has given some great tip of the iceberg ideas.

    Any business, if you are taking it serious, really requires insurance and an understanding of your product – especially as you will be deemed the importer, as they onus will fall on you to ensure insurances and coverage is up to date.

    Re the other questions, ‘protecting personal assets’, i would seek professional and not forum insight into this. Invest a little coin and speak to an accountant to ensure you head down the right path, although i will also add:
    – Other drop shippers – some are professionally set up and some do it from a lounge chair with no set up at all… All personal and will come down to what you want to achieve and invest
    – Some sole traders some not, lawsuits can always happen if you are the importer as you are responsible for the care of integrity of the item
    – some are care free some arent.

    The above will give you insight as to why it is hard to answer your questions, as they are very open ended and each and every drop shipper will be different.. Again i recommend seeking advice from your accountant that will take into consideration your personal situation..

    Have you considered dropshipping local suppliers to mitigate the legal accountability a little from faulty products?


    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
    • Total posts: 4,472
    Dave – FS Concierge, post: 270289, member: 49676 wrote:
    using a supplier you trust,

    Just be extremely careful with this one. Firstly how do you define a supplier you trust, but when the crap hits the fan, will they still be standing behind you with your interests front and centre or will they have their own interests front an centre. Sadly there is little trust in business, and if you build your business on trust alone, enjoy.

    Forget trust and have insurance. Because really remember the consumer wont care if you trust the supplier, their first point of contact is you as the retailer, the first point of contact for their solicitor will be you as the retailer, neither of those will care if you trust your supplier or not.

    Consider that if you run into a problem, you are the only person in the world that will be able to resolve it, as a consumer I dont care about your trust levels, who you purchased from, or that you had calamari for dinner, I want my problem resolved, and I want you to resolve it.

    • Total posts: 1,676
    LucasArthur, post: 270290, member: 34537 wrote:
    Any business, if you are taking it serious, really requires…….

    Key Phrase that should be burnt into the brain of anyone thinking of going into business.

    If you are saying to yourself things like

    I have $5k what business can I try


    I have a business idea that I really want to pursue and max resources I can invest are $20k


    I’m prepared to risk $10k on this idea

    Then ask yourself…..I am really ready financially to even try this.

    How do you even know its a profitable business model if you don’t have any detailed forecasts that include costs of setup and ongoing expected profitability?

    It might come across as harsh but I see so many people throw away tens of thousands on poorly thought out ideas – I feel duty-bound to encourage you to question yourself and ask……are you ready…..are you serious?

    • Total posts: 14

    Thanks everyone for your answers, I’ll look to some possible refined answer questions :)

    • Total posts: 210


    General information disclaimer as per usual.

    Different business structures have different sets of implications in terms of personal liability. Eg. a sole trader has unlimited legal liability.

    If you’re not sure about which structure is right for you, always speak to a professional (accountant or lawyer) as the implications are more than just tax.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.