Running a website remotely from another state

I'm not a lawyer, but I've been in business for almost 25 years.

The current legal consensus (which Texas is trying to change, since they house a disproportionate number of web servers for out-of-state entities) is that the location of the physical web server is irrelevant. What matters is the address on the domain's WHOIS record.

The answer to your problem is a Delaware corporation. Delaware has no state sales tax, and very favourable corporate tax laws. You can incorporate your company in Delaware over the internet within 24 hours for about $200.

You have to jump through some hoops when you run a corporation. Once you incorporate your company, open a corporate bank account and "invest" a quantity of money in it by transferring some of your own funds into the new account and recording a stock sale to yourself. Then "sell" all your domains to the new corporation, setting up a new account at your registrar and transferring money back from the company (or trading yourself more stock for them), then pushing the domains over to the corporate account.

These procedures seem like a silly waste of time, but if the government comes banging on your door saying you are just using your company to dodge tax liability, you need to show a clear and distinct paper trail that shows every single thing you gave to the corporation was paid for by the corporation, and every single thing you got from the corporation was compensation for specific services rendered on its behalf.

It is all this "silliness" that makes it a company and not a scam. Think of it like "showing your work" on a math test. You have to record a bank transaction for everywhere the money is supposed to go, not just net out the end result and shuffle the money as little as possible.

What difference would it make? Unless it is run as a corporation, US law dictates that *****ANY***** legal residents must pay applicable taxes. I believe you are considered a resident after 90 days. It doesn't matter if you are from the deepest regions of africa, and they don't care WHERE the money comes from. ALSO, the *****state(s)***** that consider you a resident are allowed to, and often do, charge taxes. And YOU, as a resident of the state, are expected to pay those taxes. Again, I think it is 90 days with most, but obviously that isn't ALWAYS the case.

NOW, if you are a corporation, it is based according to where the corporation is, physical presence, and the laws of those states. Nevada, for example, doesn't treat you as if you have a presence there unless you REALLY do! California will charge you based on where you have the presence in california, and California will NOT allow you to run a business office there as a corporation unless you are registered in California as a "foreign" corporation.

A Nevada corporation is considered a foreign corporation EVEN though both states are in the US and even BORDER one another. By foreign, they mean outside of the STATE!

Nobody ******ANYWHERE****** and obviously not amazon, cares where your server is.

And WHAT are you trying to do? You DO realize what affiliates are, right? If you accept the money from YOUR corporation as a resident of say california, then you could have to pay tax on it as if amazon had paid you. So either way you could lose, EVEN if you got away with it.

One way you COULD get away with it is if amazon paid your corporation and YOUR state stayed out of it, and the CORPORATION paid you as an employee, or used the money elsewhere for CORPORATE purposes. If you use it for personal purposes it "pierces the corporate veil". Piercing the corporate veil - Wikipedia, the free encyclopedia

Bear in mind that california, just as an example, thought of this. That foreign registry allows them to dictate things THERE also!

I'm NOT a lawyer or accountant, BUT:
1. I DID have a california proprietorship, with sales permit.
2. I DID have a nevada corporation.
3. I DID lose my CA sales permit and researched it heavily BEFORE the internet was opened, and before the WWW. They do NOT make it easy! CA simply told me I lost my sales permit and couldn't get a new one due to the change in my business. I had to call over a half dozen people and spend hours on the phone before I got the info.
4. Nevada made a STUPID mistake on my paperwork and a nice woman finally figured it out and she and I had a nice LONG talk about the way nevada does business right down to sales tax, presence, and corporations. She was the person that does all that paper work and seemed WELL versed on the applicable rules.
5. I travel a LOT on business and once had to pay income tax to SIX states! THAT is why the tax programs allow you to and SOME states even have reciprocal agreements.

So if anyone tells you different from what I have here, they are probably wrong.

BTW nevada, like delaware has NO income tax. But NEVADA some timee ago started requiring corporations to have business licenses. You have to pay tax THERE! Delaware might be the same or become the same.

One more thing. Unless accountants have dealt with the state you are in, and the state the corporation is in, understand the relationships, and you tell them the truth, they will NOT be able to accurately answer your questions. Same for a lawyer. In fact, a lawyer might ask you to consult your accountant, and THAT is why I say IF so many times, and referred to california and nevada. YOUR state may vary! BTW business, at least in nevada, is based on a FIXED business office, or a B&M store. And even a nevada corporation is allowed to do business with NO sales permit, as long as they don't have a presence. I say that because THAT is the mistake someone made once, and I went along with it. BTW servers DO NOT COUNT!

As a nevada corporation, for a time, I had a virtual office I could operate from. The corporations mail was even sent there. Since it was NOT the corporations place of business, and the offices weren't dedicated accordingly, IT didn't count as a presence EITHER!

Steve

Yeah, for something like this, the payment, since it would be business to business, is taxed based on the state you are incorporated in. Like I said, the foreign registration MAY throw a wrench into that. If you are paid as an employee, you are expected to pay the applicable FEDERAL and STATE taxes. And the taxes are based on the EMPLOYEE's current residence.

State sales taxes, on mail order goods, have been required by MANY states for a LONG time! But the BUYER is expected to report them on their tax return. I DOUBT many take the time to check every receipt, etc... They didn't even TELL anyone, they just put it on the tax return! Well, NOW they are doing this new tax on affiliate income. 8-( It USED to be what the RECIPIENT had to
report, match up the 1099, and PAY, but now amazon has to.

BTW regarding the corporation, what happens if rules change THERE also.


Steve

Before you incorporate in any state, check the ongoing cost of maintaining the corporation and make sure it's less than your forecasted earnings from Amazon.

I agree with CDarklock - a Deleware corporation seems like the best alternative, but I count incorporating my prior business as one of the biggest mistakes I've made. Make sure the benefits outweigh the costs.