Do y'all incorporate, have LLCs, etc.?

[notaprettysite]

As usual, I may be putting this in the wrong thread, but here goes...

Do many of the people on this board form corporations or LLCs for their internet ventures? Although I am reeelly small potatoes at this point...I have one website which earns me a few bucks a day...I am thinking of incorporating for liability protection and tax purposes. I would like to be able to write off my webhosting, domain registration, I'm going to buy a laptop soon, computer paper, any online courses that I take...and it seems as if it would be easier to do that if I had an LLC or corporation.

 

[Linda Buquet]

Well you can still TOTALLY write-off any business related expenses. Either way you'd write all that off. The main difference tax-wise is you only pay income tax on the money you PAY yourself, not all the income you bring in. There may be others but that's the main one.

I've thought for a long time I should Inc. I pay a ton in taxes and asset protection is always a good thing. Plus it would look more professional.

However I just asked my new accountant about it and he said he does not advise it for sole proprietors unless they really need asset protection for some specific reason. AND he said the asset protection would ONLY work if you totally treated the company as a corporation and religiously did all the paperwork. I'm terrible at getting paperwork done and really don't need a bunch of extra busy work in that area.

Here's what my account said:

"A couple of things to keep in mind. First of all I am not one in favor of setting up Corporations unless it is truly for protection. If you are really concerned about lawsuits then it would be good. However, in talking to the attorney we used I asked him about the Corporate vale being pierced if you were sued. He said as long as you were following all the rules of a Corporation it would be hard to pierce the Corporate veil.

Most small Corp. (Individual or family owned) don't keep good records. They mingle funds etc"

All in all I've heard S Corp is much better than LLC if you decide to Inc.

I'm neither an accountant or any attorney, so this is not professional advice, only my opinion.

 

[notaprettysite]

That is some good info

It might vary state by state also. I'm about to do my taxes, so I'll ask my accountant about it from a tax standpoint. And I know a bunch of lawyers so I will try to get some answers about how much protection it offers.

I'll also do some online research into the S Corp vs. the LLC corp as well. I know, there is a fair amount of paperwork involved in doing corporate stuff.

 

[MarketLeverage]

I would suggest consulting an accountant. An accountant can tell you at what point you will need to be an LLC or incorporated. Incorporating is a lot of work and is a lot of paperwork to keep up with. For instance if you pay your corporation dues one day after May 1st. The $150.00 fee becomes a $500.00 fee.

 

[notaprettysite]

Thank you for the info!

 

[eastfwd]

I swear by the S-corp myself. It's like a hybrid corporation/LLC. You file all your expenses as a corporation, yet you report any income from it through your regular individual 1040. I'm not a tax person, so pick from the endless resources of the IRS for reliable information on if it's for you.

 

[MarketLeverage]

I agree... S Corp is the way to go.

 

[kevin7890]

Hi there-

I am certainly not an expert in this matter, but I did accumulate some info during my quest for LLC/S Corp debate so let me see if I can help you.

I have one website which earns me a few bucks a day...I am thinking of incorporating for liability protection and tax purposes.

Unless you are specifically providing how-to instructions on financial instruments or dangerous equipment, I'd say your liability is very limited. LLC and S corp treat profit & loss similar to sole-proprietorship.


..would like to be able to write off my webhosting, domain registration, I'm going to buy a laptop soon, computer paper, any online courses that I take...and it seems as if it would be easier to do that if I had an LLC or corporation..

You do not need LLC or S corp, or even C corp to write off expenses. Most states allow you to declare DBA (doing-business-as) sole proprietor entity and allow you to write off expenses. (careful about your laptop; make sure you use it 100% for business and you will need to amortize it (5 year rule I think)). Whether you are sole proprietor, LLC, S Corp, etc., you will need to make sure that you profitable 3 out of 5 years to ensure that your business is legit and not a hobby.

In comparing LLC vs. S Corp, LLC is far cheaper to establish and maintain than S corp. You will most certainly need an accountant for S corp as the paperwork requirements are more stringent. In NJ, I paid $500 to establish LLC and have to pay $100 annual fee. S corp is for you if you intend on issuing stocks (aka equity) to a limited number of shareholders (50?). For more detailed info, visit nolo dot com.

Based on your comments, I think it would be better for you to invest the money to grow first then re-assess in the near future.

I ended up forming an LLC only because I had my own consulting firm and needed it to interact with large corporations. If I didn't have this requirement, I most certainly did NOT need LLC or S Corp.

Either way, good luck!

Kev

 

[Linda Buquet]

Affiliates Should you Inc? Best Corporate Structure?

Jonathan Volk had a great post last week I wanted to share with 5 Star readers.

<blockquote><strong><a href="http://www.jonathanvolk.com/affiliate-marketing/best-corporate-structure-for-affiliates.html">Best Corporate Structure for Affiliates</a></strong> - "So you’ve decided to become an affiliate or perhaps you’ve been an affiliate for a while and now things are taking off and want to know the who, what, where, when, and how of incorporation. Please note that most of the information here applies only to USA Affiliates."</blockquote>
He goes over the different options - pros & cons. Worth reading the comments too.

 

[Vitalink]

Thanks Linda for that link......I have been trying to decide what I should do....this will be helpful. Also, I am fairly new to this site and I am so glad I found it Looking forward to being a part of it!

All the best!

 

[Linda Buquet]

Thanks Vitalink,

I've been reading your posts and wanted to welcome you once you posted your intro,
but I'll just do it here. Welcome to 5 Star.

 

[Vitalink]

Thanks Linda, I look forward to being a part of this forum!

All the best
Candice

 

[OraSchwarta]

This is a very inteesting thread. I read in Robert Kiyosakis book "Rich Dad, Poor Dad" that he formed an LLC and that's how he can remain rich, basically all the money goes into the corporation and he doesn't have personal income, so the government doesn't get his money.
At least that's what I got out of it. It's nice to hear some conversations about it.

 

[jcorkern]

I believe that Linda mentioned what I consider to be the most important part of affiliate marketing, and it is not the legal structure, it is the financial structure that is best for you, and the only way you are going to know this is through your accountant!