Friday, January 23rd, 2009

Getting down to business

I wanted to take some time tonight (and possibly over a few days) to talk about setting up your business. Now you may think that this isn’t necessary… And to be honest, for most it isn’t. For most people reading this right now they will never go anywhere with their “Make Money Online” venture. I encourage you to read this post only if you are serious about working for yourself and not for “the man”. Also as a side note… This is geared towards US affiliates/marketers. And when in doubt please seek professional legal advice. This is meant to be a guide not the bible on this subject.

So with every great venture we do that involves money, we invoke laws upon ourselves. Unfortunately are also need to protect ourselves FROM these laws and protect ourselves WITH these laws. Here’s what I mean. There are laws that are set into place that can harm you financially if you do not follow them. At the same time there are laws set in place that will protect you financially if you do follow them.

The key to setting up a legal business entity is to avoid costly mistakes and legal problems. Now this doesn’t mean that if you make $10 a month from Adsense that you have to follow these guidelines. For most affiliates starting out in this business you are fine not setting up a legal entity. However, I strongly suggest affiliates making enough income to support themselves to form a legal entity.

Their are several different types of business entities that an affiliate can form. The main 3 are these: Sole Proprietor, Limited Liability Company, S-Corporation.

Sole Proprietor – This is a company that is owned by you and you alone. A Sole Proprietorship reports their earnings for tax purposes under their personal taxes. There really aren’t any requirements to owning a Sole Proprietorship. You don’t even have to be making any money to own a Sole Proprietorship. The down side to an SP is the simple fact that you have no asset protection. This means that if someone wants to legally go after your business then they are going after you. Your money and your business aren’t separated. This is what I formed when I first came into Internet Marketing.

Limited Liability Company (LLC) – An LLC is great because it begins to offer protection for yourself. LLCs receive the same personal liability protection as Corporations. However, with an LLC you don’t have as many formalities as you would with a Corp. Once you begin to move into larger business entities you have special requirements that need to be met. With an LLC you have to have an Employer Identification Number (EIN). It’s extremely easy to obtain an EIN. Some affiliate networks require that you have an EIN in order to receive your checks, so who knows… you may already have one. One of the down sides to owning an LLC is the “Self Employment” tax. Your tax adviser can help you with this one.

S-Corporation – S-Corp is another way of saying “Small Business Corporation”. S-Corps are nice to own because you don’t have to worry about the self employment tax. Like an LLC, S-Corps allow for personal liability protection. Unfortunately, forming this type of entity requires a little bit more work on your part. There is much more paperwork to fill out, and much more requirements. Technically with an S-Corp you have to legally hold Corporate Meetings and take “minutes” on the meetings.
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In the next few posts that I make I’m going to go into setting everything up right (very short post), forming a business plan, setting up your work space so you can be productive, and a few other nifty topics on the subject. So keep an eye out if your serious about being serious.

ANDREW… SHOW US MORE LANDING PAGE TIPS… THAT’S WHY THESE PEOPLE ARE HERE LOL


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12 Responses

January 23, 2009

I agree with you Kris, LLC is really great. It begins to offer protection for ourself and its receive the same personal liability protection as Corporations. Fantastic, my tax adviser advise me for this one.


January 24, 2009
Pete

What about setting up a DBA for when you first start out. Is that a good idea?


January 24, 2009

This is a good area to talk about. I am looking forward to your next posts.


January 25, 2009
Chris

Awesome post Kris!

I’m looking forward to see what else you’ve got to say about setting up an actual business.

As I move to make more money I know that I’m going to have to take either LLC or S-Corp…so reading these posts help make the decision a little more clearer!


January 25, 2009

@Pete – A DBA is okay if you are just starting out. This will keep your name off of things for the most part. But as with a Sole Proprietorship you will be help 100% liable. This means that people can screw you over and not just your business.


January 27, 2009

Hey Kris, great post man. LLC is long over due for me. I have some apartments and if someone falls and breaks their a– I’m a dead duck. I am well insured but who knows. I would like a firewall b/t me and my idiot tenants….


January 27, 2009

btw, I absolutly love the iTouch plugin for this site. I have read every single blog entry from the beginning on my iTouch while laying in bed at night or while my daughter watches “Barbie Fairytopia” for the 30th friggin time…


February 5, 2009

Very very good area for talk. And there is also so much information for learning. I love this kind of post.
Till


March 8, 2009

I really like this post, here is a suggestion for you guys… it is something that I find hard to find on the internet, and maybe you guys can capitalize on that?

I was wondering… I have always heard that having a corporation can help with the taxes. Perhaps you guys can give a break down of how much money you actually saving with having a corporation in different “money brackets”. That would be an awesome post!

Thanks guys,

Jean


March 20, 2009

Hit to the point, generally people not checking such point which really beneficial for them, searching next post on your blog.


April 17, 2009

I belive that Sole Proprietorship is the best way to go about things if you don’t need a lot of money to start the business (or alternatively if you have enough of your own). At least you don’t need to report to anyone.


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