I would question your incorporation expert.

There is probably no legal definition of an Online Business.

You can incorporate almost any type of business in almost any state or in another country.

Are you making any money with your online business yet?

Joe Mobley

Yeah, there is NO way you will OFFICIALLY classify a business as an online business. That SIC would be *********SO********* large it would be just DUMB, and it would be subject to CHANGE!

The SIMPLE, OBVIOUS, TRADITIONAL solution? Say that a given SIC is ONLINE!

SO, ONLINE SCHOOL becomes SCHOOL, ONLINE! It is NOT an online business, but a SCHOOL that happens to be online.

If you need licensing, training, etc... it would be for the SCHOOL.

Steve

One more thing. If you are not selling taxable goods in your state, you may not have to file any paperwork in your state, assuming you incorporate elsewhere, though they WIll want you to declare income. I BELIEVE that is only what you draw though. See a tax attorney or other qualified person.

Steve

I have looked into this a couple times and talked to a few tax people. I make my living 100% online for 9 years - they both discouraged me from incorporating because you do not save a dime for doing that - in fact you pay for incorporating every year -

Unless you have extensive equipment and property to protect there is just no reason to do even LLC - I have also looked into 2 other forms of incorporation in the past.

At least for California if you are sitting in California on your computer doing your work and you very cleverly think you will save a few dollars by incorporating in another state, well they will charge you a fee for doing that which you will pay to California.

In fact you pay taxes not just as self-employed but FOR being self-employed. It's a real racket but I wouldn't trade it for the world.

California state tax is insanely low (why we are always broke) - well that and we are do-gooders who welcome people illegally here on the sponge and etc.

So I am saving money each year by not incorporating and just paying the state taxes.

I also pay locally for a business license - why I do this - because I am stupidly honest, and I thought it would give me more legitimacy those first few years when I wasn't making much money - (I think it is 4 years you can deduct expenses for your business without making a profit) - after that it is considered a 'hobby' and as such is not deductible.

Patrician,

My father once created a company. It was TOTALLY LEGAL!!!!!!! It was left to languish. He had a partnership, supposedly the name was only three letters. He NEVER said what they were but, since they matched the earlier business, everyone assumed they were for THAT! He bought out his partners, and got full ownership of the company. One day, a guy came in, sat on the couch in the waiting area, and waited. When asked what he was there for he indicated that they didn't have a business license on file! Ironic, but they had to kind of merge the companies then and there ad convince the auditor it had always been that way. I believe they were in that area for over a decade!

Eventually, they found out. HEY, he HAD been paying for it all that time, etc....

The PRIMARY reason for a corporation or LLC is for LIABILITY. Both DO increase costs. In fact, if a corporation is a class C, it often removes deductions you COULD have made, making it even MORE expensive. But it is a MINOR expense to limit liability.

Steve

well all i know dennis is the vast majority of my taxes are federal.

Like a ratio of $5000 fed to $500 state.

I can't believe we have high income tax compared to other states.

I feel that I owe California for lots of reasons - that has to trump how angry I am at the government for what they spend our money on - and worse what they don't.

(not state but I am practically frothing at the mouth about the feds taxing social security taxes - social security is not welfare or some entitlement program - it is money that they took in taxes in the first place and got to use throughout people's entire working career -

... and then when they retire 'the man' wants to tax that money AGAIN - at a time when many people will be hard pressed to figure out how to live on social security PITTANCE - especially if they lost all their other retirement savings in the circus known as the missing economy) - while simultaneously the 'pols' live high on the hog on our money "up there" in the Gutterment.

better not comment on my comment the last part sounds 'political' - eewww