Business License Question

by flynpa
9 replies
Hello all. I am ready to get started but want to make sure I am OK legal wise. I have searched this topic but have not found anything definitive. I know local, county, and state laws vary but in general do I need to register as a DBA, LLC, INC, etc? Do need a tax ID number or will my social be OK for now? Even if these things are not required, should I do it anyway?

Thanks,

Stuart
#business #license #question
  • Profile picture of the author E. Brian Rose
    You are going to get a lot of answers here and most will be wrong. This may be the greatest IM forum around, but most members are not lawyers, but they sure do like to pretend to be. (I'm guilty of this sometimes)

    Try doing some Googling on the topic and then talk to a CPA or attorney that specializes in small business. Let me google that for you
    Signature

    Founder of JVZoo. All around good guy :)

    {{ DiscussionBoard.errors[2826498].message }}
  • Profile picture of the author flynpa
    Guess I will have to talk to a CPA and an attorney. I was just hoping you guys had already done that leg work.

    Thanks,
    Stuart
    {{ DiscussionBoard.errors[2827520].message }}
    • Profile picture of the author Sardent
      Originally Posted by flynpa View Post

      Guess I will have to talk to a CPA and an attorney. I was just hoping you guys had already done that leg work.

      Thanks,
      Stuart
      A lot of people have.

      But everyone's situation, and business, is different. That's why it takes an expert, like a lawyer, to put their stamp of approval on what you need.

      Consider it an investment in insurance.

      But don't go in blind. Remember the First Law of Expert Advice - Don't ask a barber whether you need a haircut.
      Signature
      {{ DiscussionBoard.errors[2827583].message }}
  • Profile picture of the author Don Schenk
    Start with a CPA to get a bookkeeping system. It will save you bundles of money (and agrivation) later because it will be compatible with what your CPA needs.

    The CPA can discuss different business models -- sole proptietor, C-corp, S-corp, and LLC with you from a tax standpoint and will be able tell you whether you need a federal tax ID or just be able to use your social security number.

    Many start as a sole proprietorship and change to an LLC or corp later as needed. I went with a C-corp in 1979 and have stayed that way. LLC didn't exist back then.

    Once you gain employees here in the US, then it all changes. I am not saying that is bad, it just becomes different.

    A tax attorney can also advise you about business entity types.

    CPA or attorney - either way it's a few dollars well spent in the beginning.

    :-Don
    {{ DiscussionBoard.errors[2827631].message }}
  • Profile picture of the author Rich Struck
    If you just want to run a few websites with affiliate links, no, realistically you aren't going to need any licenses or anything. However, at the very least you should register a fictitious name in your state and get a business bank account.

    On the other hand, I know a guy who starts a new corporation every time he starts new site, no matter how insignificant the site may be. It seems a bit much to me but everyone has a different comfort level I suppose.

    There was something in the news a while back about some city imposing a fee on a blogger, you might want to Google that.

    Things get more complicated if you decide to sell a product of your own (electronic or physical) because of sales tax. As an affiliate, that isn't your problem.

    If you decide to go full-time later on then perhaps get some professionals involved but if this is just a little side gig I really wouldn't worry about it that much.
    Signature

    {{ DiscussionBoard.errors[2827698].message }}
  • Profile picture of the author seasoned
    Originally Posted by flynpa View Post

    Hello all. I am ready to get started but want to make sure I am OK legal wise. I have searched this topic but have not found anything definitive. I know local, county, and state laws vary but in general do I need to register as a DBA, LLC, INC, etc? Do need a tax ID number or will my social be OK for now? Even if these things are not required, should I do it anyway?

    Thanks,

    Stuart
    Generally....

    A DBA is needed ONLY if the entity is not named the same as a person related to the business. A corporation(INC) is considered an unnatural person, under the law. If it makes a mistake, etc... IT pays, YOU don't. You are essentially like a guardian for the person. An LLC is similar.

    A tax ID number should be used if you want to keep the company finances separate. It should also be used with a corporation.
    {{ DiscussionBoard.errors[2828064].message }}
  • Profile picture of the author rcnsmith
    I say go with a LLC to start. If you are offering services etc then you definitely dont want to be a sole trader. As a sole trader if you break it you have unlimited liability i.e. they can take your house and everything else to pay for the damages you caused. LLC and the others assist against that as the corporation is the entity that taked the unlimited liability (you keep your house if you get sued for messing something up).

    The difference between LLC and Corporation is generally the way its taxed. corporation will get taxed corporate tax at i believe 35% and if you form a LLC then you will be taxed on your personal tax returns with the share that you made.

    Example of LLC taxing:
    An LLC has a profit of $350,000. Its two Members each have a 50 percent share in the LLC, so each one is taxed on $175,000 of income on his or her personal tax return. The income from the LLC is included in the 1040 on line 12, and is considered along with other income for that person or couple for that year.

    Whereas with a Corporation:
    A corporation has a profit of $350,000 for 2007. That profit is taxed at the corporate tax rate of 35 percent.

    Of course as stated earlier you might want to talk to that CPA and lawyer to make sure your butt is covered before you get yourself in trouble. My advice will not hold up in a court of law
    {{ DiscussionBoard.errors[2829046].message }}
  • Profile picture of the author Simba1
    One rule of thumb if you're taking this serious is to start at least an LLC. Liabilities can be an area of major stress, so it's always better to be safe than sorry. Google the topic specifically to the state that you are in and take it from there. In this wild west of affiliate marketing, it's always good to befriend an attorney and an accountant. Good luck.
    {{ DiscussionBoard.errors[2841098].message }}

Trending Topics