Say I have a product I wish to sell online. How long could I operate before needing to go legit by collecting in state sales tax and forming an LLC?

You should step away from the nuclear option of shutting down your business. 

You aren’t informed enough to even remotely make that decision yet. There needs to be a bit more information in order to fully answer this question, but it sounds like you have a similar set up as someone else. This isn’t illegal—it’s called competition. However, because they took the trouble of having their lawyer draft up something, you should have your own attorney take a look at it before you make any hasty decisions.

LawTrades is happy to put you in touch with an affordable and highly qualified business attorney. When you own a business, stuff like this may happen from time to time. Maybe someone is just trying to bully you out of the way or maybe you are doing something that is against the rules. Either way, you could use some legal guidance. Check out our site and get in touch if you’d like a consultation!