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Founding LLC or C-corp is necessary for being an online marketer?

by jiwonman
10 replies
Hi I am working as an internet marketer in USA.

Most of my income comes from being an affiliate to Amazon, Jvzoo,CJ and others..

Do you guys have LLC or c-corp for paying tax matter or do you usually pay taxes being a self-employee?

What are the benefits out of having LLC when you are the only one working for yourself.

Kindly let me know!
#ccorp #founding #llc #marketer #online
  • Profile picture of the author JosephC
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    • Profile picture of the author jiwonman
      Originally Posted by JosephC View Post

      Just file a sole proprietorship. Much easier, cheaper, and you can mix personal and business assets. This is better for an online business.

      LLC and c-corp are more complicated and really have no benefits unless you have employees.
      Thank you, Joseph. It makes sense but being a sole proprietorship doesn't protect your personal assets right?

      For example, I also like investing in domains and I saw this one case (dominer vs giant company) WIPO Domain Name Decision: D2012-2179
      Do I just need to pay big money to defend my personal assets if this happens to me?

      just a question of the day. Thank you all!
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    • Profile picture of the author kilgore
      Originally Posted by JosephC View Post

      LLC and c-corp are more complicated and really have no benefits unless you have employees.
      This is not true at all. For instance, one of the really big benefits of these incorporations is liability protection. According to NOLO:

      "Liability issues are of particular concern for sole proprietors because the owner is personally liable for claims against the business. Unlike an LLC or corporation, if a sole proprietorship loses a lawsuit or otherwise finds itself in debt, not only will the business be liable for the debt, but the owner/sole proprietor will be as well."

      (Source: Liability Concerns for Sole Proprietors | Nolo.com)

      For me, this alone was enough reason to incorporate as an LLC instead of as a partnership. Is it important to the OP? I have no idea. And even if it is, for some types of liability you can buy insurance. But not others. Moreover, there are myriad other advantages (and disadvantages) to each incorporation type beyond liability issues.

      The point is that it's very complicated. People run successful businesses under every incorporation type you can think of, but what's best for them may not be what's best for you.

      Thus, my unprofessional, incompetent legal advice is to find some professional, competent legal advice.
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      • Profile picture of the author jiwonman
        Originally Posted by kilgore View Post

        This is not true at all. For instance, one of the really big benefits of these incorporations is liability protection. According to NOLO:

        "Liability issues are of particular concern for sole proprietors because the owner is personally liable for claims against the business. Unlike an LLC or corporation, if a sole proprietorship loses a lawsuit or otherwise finds itself in debt, not only will the business be liable for the debt, but the owner/sole proprietor will be as well."

        (Source: Liability Concerns for Sole Proprietors | Nolo.com)

        For me, this alone was enough reason to incorporate as an LLC instead of as a partnership. Is it important to the OP? I have no idea. And even if it is, for some types of liability you can buy insurance. But not others. Moreover, there are myriad other advantages (and disadvantages) to each incorporation type beyond liability issues.

        The point is that it's very complicated. People run successful businesses under every incorporation type you can think of, but what's best for them may not be what's best for you.

        Thus, my unprofessional, incompetent legal advice is to find some professional, competent legal advice.
        Thank you, Kilgore.
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        • Profile picture of the author agmccall
          I currently have a corporation sub chapter-s for my ecommerce site that I have a partner in, and LLC for affiliate marketing I do with my wife

          al
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          "Opportunity is missed by most people because it is dressed in overalls and looks like work." Thomas Edison

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          • Profile picture of the author jiwonman
            Originally Posted by agmccall View Post

            I currently have a corporation sub chapter-s for my ecommerce site that I have a partner in, and LLC for affiliate marketing I do with my wife

            al
            Did you establish your LLC in NY? I just moved to NY from Cali..
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    • Profile picture of the author kindsvater
      Originally Posted by JosephC View Post

      LLC and c-corp are more complicated and really have no benefits unless you have employees.
      This is not true, you're leaving out S-Corps, and unless you're qualified to speak on this matter dishing out advice can be dangerous..

      Two major reasons to have a separate business entity:

      1. Tax deductions. Major tax deductions are available with entities you are not going to get with a sole proprietorship. In my tax reports I suggest having multiple businesses - your own sole proprietorship and a separate entity is a method of securing the largest deductions and thus saving the most money.

      2. Liability protection. This depends on the situation. If you are personally doing something wrong then having a separate entity may not protect you. It might. And if you outsource anything the entity can act as a liability buffer.

      you can mix personal and business assets
      Again, this is bad advice.

      Any business: sole to corp, can "mix" personal and business assets. The challenge, come tax time, is "unmixing" so there is a separate accounting of what is personal and what is deductible for the business.

      Example: A sole proprietorship can only deduct business expenses. You cannot deduct personal expenses.

      .
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      • Profile picture of the author jiwonman
        Originally Posted by kindsvater View Post

        This is not true, you're leaving out S-Corps, and unless you're qualified to speak on this matter dishing out advice can be dangerous..

        Two major reasons to have a separate business entity:

        1. Tax deductions. Major tax deductions are available with entities you are not going to get with a sole proprietorship. In my tax reports I suggest having multiple businesses - your own sole proprietorship and a separate entity is a method of securing the largest deductions and thus saving the most money.

        2. Liability protection. This depends on the situation. If you are personally doing something wrong then having a separate entity may not protect you. It might. And if you outsource anything the entity can act as a liability buffer.



        Again, this is bad advice.

        Any business: sole to corp, can "mix" personal and business assets. The challenge, come tax time, is "unmixing" so there is a separate accounting of what is personal and what is deductible for the business.

        Example: A sole proprietorship can only deduct business expenses. You cannot deduct personal expenses.

        .
        I agree that it's better to have llc or corp to have separated accountability. I actually have LLC in California but paying $800 yearly fee is too much for me. Which state is the best to register LLC in? Do you have any advice on this subject?
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        • Profile picture of the author kindsvater
          Originally Posted by jiwonman View Post

          I agree that it's better to have llc or corp to have separated accountability. I actually have LLC in California but paying $800 yearly fee is too much for me. Which state is the best to register LLC in? Do you have any advice on this subject?
          The tricky part is not having California demand their $800 per year because your butt is physically here running the company AND having to pay a registration fee in another state.

          Wyoming is good. Check out 29dollaragent.com

          .
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  • Profile picture of the author Tonester
    I had a S-Corp for many years in an off line business. I would never do it again, unless there were many, many more advantages. Here's why.

    Any type of corp. is complicated and has it's own rules. (For instance, did you know you must have meetings and keep records of your "minutes" from those meetings?) Of course you can fudge that, but it's just one more thing you have to do.

    Plus, the liability thing is true but the advantage is usually over stated. Did you know that someone that wants to sue the corporation, can also sue you personally for liability? Therefore, your assets are not protected in that case.

    The one case where they are protected is vendors, if you're buying supplies and owe people money. If you go under and can't pay them, they can only make a claim against the business assets, not your personal ones. But it IM, how much debt are you really in? We all pay for things in advance, right? Software, courses, etc?

    So to me, it's not worth it.

    DICLAIMER: I am not an attorney and it's best to see one. Everything I mentioned above is accurate based on my past experiences with corp. versus sole proprietor.
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    • Profile picture of the author Walter Parrish
      1. I am not a lawyer and suggest that you speak to a lawyer or a few lawyers first.

      On a personal note if you are bringing in good money It used to be popular to Incorporate in Nevada or Delaware. However, even though you get privacy concerning your taxes with Nevada recently for the past few years this has been put under the microscope.

      The other thing you need to consider is Double Taxation when you and your business are taxed.

      Bottom line talk to a lawyer and an accountant to find out what your best options are.
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