IM Newbie needs to know about Bank accounts, Paypal, Accounting and Tax etc etc

You really need to discuss all those questions with a CPA. Don't rely on well-intentioned, but possibly (likely) erroneous advice on an internet forum.

Hey, welcome to the online way of doing business!

I can try to help answer some of your questions, but I'm not an attorney or a tax accountant and anything I say is just my opinion and can't be taken as legal or accounting advice.

To start an online business, you can start with a simple LLC... I went in and did an S-Corp straight out of the bat but I wish I just did an LLC to start with because it's a lot easier reporting... something that I could easily do myself. Later on, you can always change... but that comes with it's own hassles.

You might even consider operating as a sole prop. The easiest of them all.

Bank accounts, you can start with your own if you're going the sole prop. route... just start a new bank account exclusively for your biz.

If you're doing the CORP or LLC route, set up a business bank account.

Then set up a biz pp account. Link the two together.

A lot of your other questions can be answered by going to PP itself... or to your own bank.

Don't get caught up in all of the "getting ready" part of your business... this can easily consume you and paralyze you from taking action on your new business. The stuff that actually puts money in your pocket.

It seems like you're trying to cover all your basis, which is definitely wise. But, I would say do the little bit that's necessary and then get going. That's most important. You never know, you might find that this business just ain't for you... and if it isn't, well at least you didn't go through the whole process of everything you just outlined in your post.

My .02 cents.

You don't "need" to have a corporation or LLC. There are both advantages and disadvantages to conducting your operations in a separate entity. If you are starting out owning a small website or two, you might find that simply operating as a sole proprietorship is the best way to go. you can always form a single member LLC later with no tax consequences.

One advantage of having an LLC is that it may help you mentally separate your business activities from your personal activities, which would be important if you ever counted on the LLC structure to isolate your business liabilities and protect your personal assets.

On another note, unless your brother is a partner in your business (which would make it a partnership for tax purposes rather than a sole proprietorship), I would NOT put your brother as a joint owner of the bank account. That could cause a lot of confusion about the business relationship.

I agree, you should probably get professional advice concerning the formation of your business.

As for linking your paypal to your bank account, that part is really easy. If you do it that way, the bookkeeping and accounting aspect of what you do would be simple, as every transaction you do would be available through online statements. Good luck!

One thing I will mention as an affiliate marketer -

Paypal will send you a 1099K.

Which effectively doubles the income you report. :-/

First heard about this at

3 Things Your Home Business Should Know about the PayPal 1099-K

and then found this on the TurboTax site:

https://turbotax.intuit.com/tax-tool.../INF23095.html

"Prior to the implementation of the 1099-K, many businesses were required to provide a 1099-MISC form to many of their suppliers if they did more than $600 in business together annually. If the transactions occurred through credit card or third-party processors, there is a possibility of these transactions being reported on both forms.

The IRS has directed that any 1099-MISC payments that are reported on a 1099-K should be reported on the latter form only, and that a 1099-MISC need not be produced. However, in practice, many companies are still providing 1099-MISC forms. To avoid double taxation, keep detailed sales records and deduct any payments also reported on the 1099-MISC form from the 1099-K before reporting, and be prepared to explain the deductions to the IRS."

Yay. Not.

1. What type of Bank Account to apply for my IM business ? I am a customer of Bank of Hawaii.
Ans: You can use this same account
2. Can this be a joint Bank Account with my brother ?
Ans: If its already there yes, else better to have on your name.
3. Do I need to form a Company or In-corporation to do IM Business ? Does it really matter to form a company for this ? Are there any dis-advantages of doing this ?
Ans: Having company wins confidence of big clients, but for smaller clients its a disadvantage to have one as they are afraid of paying unnecessary taxes.
4. How do I setup my Paypal account for this Business ? What type of Paypal account do I need ?
Ans: Normal one is ok.
5. I need to link my Paypal to my Bank account as well, can u help advice on this ?
Ans: Paypal has clear instructions on these in their website. No worries.
6. How should I go about doing Book Keeping or Accounting details for my IM Business/Paypal/Bank Account ?
Ans: You can do it in excel to begin with.
7. Do I need to hire an Accountant for this ?
Ans: If you know basics of accounting not required unless you have some good business.
8. How should I file my Income Tax ?
Ans: Your should take guidance from local CA.

If you need further support. You can contact me, I can help you out with your start up. See Business Development

I can give some basic answers but you should talk to a CPA, Lawyer, and etc for exact answers/

You should have a business account. Especially if you are collecting the money in the name of a business vs. your name. At the minimum you need a separate account for the business even if it is a personal account and you are doing all business in your personal name.
He can be another authorized user on the account. But only do this if he is a partner in the business or an employee. Partnering and how to go about that legally is best left to the professionals.
I would say you should at least have a company name. What people call a DBA (doing business as). Depending on the cost of this and the cost of an LLC it may make sense to do LLC right away. Here in IL it does not.

In the long run you will want some kind of corporation (LLC, S, C, etc) but talk to lawyers and CPAs to discuss how that would be best done.
Paypal waks you through this.
Paypal has reading on how to do this. It is not hard.
You can keep it as simple as an excel sheet (or similar) or as advanced as high end accounting software. The answer here depending on what you will be doing, the complexity of it, and who will be doing your taxes.
Short Answer: Yes
Long Answer: You may be ok if you have basic accounting skills to handle that on your own till your company grows.
If you are the kind of person who does your own taxes and you have experience managing businesses (understand P&L statements and etc) you may be fine without one.
But this question tells me you should take the short answer for #7.
You seem very worried about these things when they are really simple for small income levels.

Hire people to help you with this or google if you must do it yourself.