Is a Weblog a Business? 37
Clinko asks: "I currently have a couple moderately successful websites with Google and Yahoo ads. Combined, they will generate a couple thousand this year. (Sounds great, but read on...) The problem is that I know nothing about starting a business, filing taxes (U.S.) on such, or if I even need to be a licensed business. Will I need to start a licensed business on income generated from ads? I'm sure someone from Slashdot has been in a similar situation. What was your solution?"
Talk to a... (Score:1)
Get professional advice.. (Score:3, Insightful)
Slashdot is good for somethings, this is not one of them.
Accountant (Score:4, Insightful)
Re:Accountant (Score:1)
You're implying that non-US Governments should be ran away from in tax matters? That tax matters only matter in the US or what?
Re:Accountant (Score:3, Insightful)
Re:Accountant (Score:2)
Sole Proprietorship (Score:3, Informative)
As others have said, you can talk to a lawyer and/or an accountant to see if you could save money by doing something more "advanced," but I do the above. It adds two forms to your 1040: Schedule C and Schedule SE. About half your income from the blog will go to taxes.
Re:Sole Proprietorship (Score:4, Informative)
I have a comprable situation with my sites and income derived there from.
You will want an accountant to help sort out which business type is best for you based upon the amount of liability you're willing to personally take on, what tax structures/consequences, amount of paper work you're willing to deal with, etc.
You seem to be running a sole proprietership just by the fact of getting this extra income and you most likely used your name and your social security number to set it up with google ads/yahoo ads and will get a 1099-misc from them to file as additional income. As I mentioned in the previous paragraph you'll want to consider which business arangement (with help of accuontant/lawyer) makes sense for you... sole proprietorship, LLC, Inc. etc...
There are benefits and drawbacks to each (hence the professional help).
It probably makes some sense to get some sort of legal entity registered with your state/etc and business classification so that you can subtract business expenses from your income so that it doesn't count as much towards your overall income. Again, this isn't tax advice, consult a professional... but if you have an online/advertising business some seemingly legitimate expenses would be: internet access (if used only for business purposes, or do a percentage), webhosting, advertising to promote your site, bank fees, probably a PC to do updates/edits, other costs incurred in relation to your topic/content *shrug*
It may or may not be worth the accounting headache, but that depends on the amounts we are talking and your personal tax situation.
You may also, assuming a day job, want to/need to adjust your income tax withholding to compensate for the extra income (or not... IANAA)
Good luck with your modest web publishing empire!
E.
Re:Sole Proprietorship (Score:2)
Yup. I operated some web sites that generated some income for a few years (back when AdultCheck was still an age-verification service to protect web site operators, not the commercial porn subscription service it later became), and these days I get a little on the side from GoogleAds. Schedules C and SE are all that this has added to my annual form-filling ritual.
About half your income from the blog will go to taxes.
That depends on what kind
Sole Proprietorship is Simple (Score:5, Informative)
IANAA (Accountant), but I've done a few thousand dollars' worth of consulting -- never more than about $10k in a year -- and self-employment tax is simple. You just get a 1040-SE form and fill it out. The tax rates are a little higher (about 7.5% for me) than if you are employed because you will have to pay your own social security employer's tax (I guess part of social security tax is paid for by the employer). If you make very much, the IRS wants you to file estimated tax payments quarterly, but that's not too hard either. If you've been doing your own taxes, then you can definitely handle the additional paperwork. You can even include expenses on a 1040-SE.
Re:Sole Proprietorship is Simple (Score:2)
While that's true, it's also highly disingenuous (of the government, that is, not the parent).
If my company had 7.5% more of my salary, it might consider raising my salary. (Not by 7.5%; I'm not insane, but perhaps 2%--so it is still coming out of the employee's "total benefits package".)
Re:Sole Proprietorship is Simple (Score:2)
NoLo (Score:4, Informative)
Trust me, they are excellent and colover all you need to know ( and a lot more ).
Various levels of business (Score:4, Insightful)
If they're happy working this way, going farther is more up to you.
If you want them to issue the checks to a separate entity, like a company, you have to go through some additional hoops. You have to register the company name ("Fictitious Name") with the state, and then go to your bank and set up a Business checking account to receive the money. It's still YOU, YOUR income, you're just providing a separate pocket to drop the cash into so you can keep track of it.
The next set of levels come up if you want further separation of the company from you, if there is more than one person involved (partnership), or if you want to protect yourself from being sued. Then you need something like an LLP or a Corporation. Some companies won't deal with individuals or Sole Proprietorships because they don't like the trouble of issuing 1099s, so they will require you to set up a corporation. Reporting income from Corp-to-Corp payments is the responsiblity of the receiving party, so the payer can just issue the check and be done with it.
The problem with doing this, is it opens you up to a whole new level of paperwork and reporting for very little good reason. (One friend of mine ran an extremely successful and profitable computer service business as a sole proprietorship for YEARS because he just didn't want to bother with the paperwork.)
Rule of thumb: Do as little as your customers will accept and you feel comfortable with. As long as you pay the proper taxes on the income, generally speaking, nobody will bother you, and even if the IRS comes calling, you can show them you've followed the rules.
DISCLAIMER: I am not a lawyer or accountant, but I've had my own consulting business (S-Corporation) for close to ten years now, and I have friends and associates who also run their own businesses in various forms, so I have some familiarity with the ins and outs.
Re:Various levels of business (Score:2)
The only thing I would add is - you'll also likely need a business license from your community to set up the Business account at the bank. From memory, they are looking for the business license not the DBA (Doing Business As) registration. Depending on the community - this is likely $100-$200 a month (YMMA).
Re:Various levels of business (Score:1)
The only time this becomes a problem is if you're running
check state and local resources... (Score:3, Informative)
and someone mentioned NOLO [nolo.com] which has a lot of articles (besides the publication mentioned) on legal stuff...
Good to get a sense of this stuff before seeing the accountant...
e.
Keep in mind your personal liability (Score:3, Informative)
Just keep in mind that in a sole proprietorship, that your personally liable for your business. Most small businesses can cruise along just fine, but if you are worth a lot (house, car, etc), I wouldn't risk it. Also, if you plan on posting things that are potentially litigious on your weblog, I would consider at least a LLC. I am not sure if there are messed up laws that could potentially tie you up in litigation from the actions of your users, who knows (a lawyer, definitely not me).
You can usually do that for under $250, and under $500 with a lawyers help. I seem to remember thats how the costs for us, our small logistics software house, to incorporate LLC in Nevada.
Good luck with your venture!
Re:Keep in mind your personal liability (Score:2, Informative)
The problem with going down this road is that (like I said in my other post) it opens up a whole new level of paperwork.
The idea, like he says above, is to limit your "liability", so if someone sues the blog, they (theoretically) can't take your house, but in practice, if things aren't set up EXACTLY right
Re:Keep in mind your personal liability (Score:2)
Be cautious about "business" deductions (Score:3, Informative)
If you want to consider this a "business" and write off the expenses related to it, the IRS says it's got to be an activity carried on for the purpose of making a profit, not just a hobby that happens to generate income (even if it's a net profit). They have some nice, vague criteria on their website. Being considered a hobby doesn't free you from paying taxes on the income, but it does prevent you from deducting the expenses.
As for needing licenses, that's highly dependent upon your state, county and city (any of them might require licenses). I live in Raleigh; North Carolina has a "Business License Information Office" you can call, and they will tell you what licenses you need. Hopefully your state / locality has something similar.
My guess would be that nobody will care about licenses since you're not "engaging in a trade". However, only your state / local government knows for sure.
Re:Be cautious about "business" deductions (Score:2)
Discerning this sorta stuff is exactly where a good Accountant/lawyer/profession
Re: (Score:2, Informative)
Additional Notes - I forgot in my other post (Score:1)
If you SELL STUFF, you have to register with your state t
Re:Additional Notes - I forgot in my other post (Score:1)
You must contribute extimated tax payments if your 2005 withholdings are less than the smaller of:
- Your 2004 tax liability
- 90% of your 2005 tax liability
It's too late to worry about it now for 2005, but you can prepare for 2006. If you didn't make payments and you should have they'll tell you when you submit your statements at year end. They'll send a letter with a fine and any penalties, they shouldn't be too high if you only made a few thousand.
If you received a
Excellent book that helped me (Score:2)
Working for yourself [nolo.com] by Stephen Fishman is an excellent resource on this topic.
It presents the facts clearly and offers up solutions for improving your tax situation.
It answers many questions like business form (LLC/S-Corp/C-Corp), what is and isn't deductible, proper reporting and accounting, tax benefits like health savings accounts, etc, etc.
Liability (Score:3, Informative)
Be careful, see a lawyer, get the appropriate insurance if you are incurring any sorts of liability.
DBA (Score:1)
If you want to make things look more 'legit' by starting up a DBA it doesn't greatly complicate your taxes.
You should be able to find out where in your local area you to go to get a DBA (doing business as) form to set up a sole proprietorship. It usually costs about $20-$25. This gives you to the ability to do business as "Bob's
Re:DBA (Score:2)
First, if he is just collecting some ad revenue checks from his web log, why does he need get a "business name" (i.e DBA). In my locality, filing a DBA costs a couple hundred dollars and unless you have some public-facing business where you need a catchy name, there really isn't any point. All the guy wants to do is to make sure he doesn't get in trouble with the IRS.
Second, you state:
Now, if you have a lot of purchases associated wit
Regardless of anything else, pay your taxes! (Score:2)
Others have pointed all this out, in addition to certain advantages that businesses have over individuals when it comes to taxation: expenses can be deducted from revenue, and capital expenditures can be depreciated. How to do this correctly requires the advice of an accountant and lawyer.
But, the number one thing you should remember is that you have to pay your taxes on the income yo
DON'T Form a Business (Score:4, Interesting)
Let me tell you, filing a business license is a great way to become personally acquainted with every level of government in your state, because they will all call you up with forms for you to fill out and taxes for you to pay.
Being a business is a licensed class, and unless you *need* to, don't do it.
What you have is a hobby. Keep it a hobby. If you're concerned about being sued, well a small business will not protect you, you'll still have to hide your assets anyway.
If you keep it as a hobby you don't have to pay taxes on the income, provided it doesn't exceed your hobby expenses. IF you keep it as a hobby you dont' have to file countless forms every three months, pay thousands ot lawyers accountents, etc. And if you keep it as a hobby you are better protected.
The only reason you would ever want to form a business is if you plan to sell stock, or if you need to form a partnership and have joint property.
Seriously. People have been told a lot of gruff, and of course, accountants and lawyers have spread the idea that you need to lawyer up and have an accountant going over everything.
But you don't. Regular old tax software will handle your small business accounting as far as the IRS is concerned (and if you get some you'll see the advantages to keeping it a hobby) The IRS recognizes hobbies as a legitimate area where you can make some money, and while they will want their share of it, tehy will only want a share of your profits.
Forming a business results in a never ending amount of hassle-- from a greatly increased amount of bulk mail to periodic calls and even visits from random taxing authorities you've never heard of.
I learned my lesson once, never again.
Also, if you do want to form a business for whatever reasn, consider forming it out of state-- nevada is a good state, or out of hte country, such as in the carribean. In that case, you just need to file a registration to do business in your state. Since the business is not domiciled in your state, its a much lower burden of paperwork and regulation.
And virtually every business friendly country, or business friendly state is likely to give you a vastly better level of business protection (privacy, insulation etc) than your home state.
Treat it as a hobby (Score:1)
Of course if you are actually making a profit, then never mind...
Learn (Score:1)
Go to the local library. Check out books on running a business, setting up a corporation, accounting, and everything you are curious about. Find out what you have to do to make it all legitimate. There is a wealth of information available. If the local beauty salon can figure it all out, so can you.
Fortunately, in the US, that income you generate is considered personal income. You are taxed just as much as if you had a job. Unfortunately, that means you have to pay Soci
I think that it is a business... (Score:1)
Here are your options (Score:2)
First, you ask about getting "permits" and such. You will have to check with you locality, but where we live, you probably would not need any "permits" for what you are doing. If you wanted to register a business name, you would need to get a "permit". If you were selling merchadise, you would need to collect sales tax so you