I was informed??? that I needed to set up an LLC registeration when doing affiliate marketing via the internet. Is this in fact true? I want to right off want I have spent on different job opportunities on the net even if I have not made any money yet. Can I do this? If so, I need to do it before the end of the year. Thank you for you assistance in advance. soundstrue
Strickly speaking, it is not an absolute requirement to engage in affiliate marketing online, but if you are going to do any type of business, it's always a wise idea to take advantage of the legal protections and benefits offered by a business structure. In the case of an LLC (Limited Liability Company), it is the newest form of business structure to be added to the mix. It is a hybird legal entity that provides many of the protections from liability that partnerships and corporations enjoy. Owners of an LLC (referred to as "members") are generally not personally liable for the debts of the LLC. Liability is usually limited to the value of a member's investment in the LLC. For tax purposes the LLC is treated as a partnership, which means that income and losses are passed through to the members, shielding them from the "double taxation" that occurs with a corporation. Hermas
pcwork: Why are many companies Incorporated . Is it simpler or cheaper? If you are asking why most companies have Inc or Co after their names, it's because the form of business organization that permits those designations was in existence long before LLC, which was only recently enacted in the United States in 1977. Hermas
Google chose that form of business structure because it suited their objectives and business model. Hermas
From a financial perspective, when does it become worth it/necessary to move from a sole proprietorship to an LLC? I mean, if I barely make enough to even declare the income for tax purposes, is it really worth the expense of making my business an LLC just for the legal protections provided?
mommybeth2007: I mean, if I barely make enough to even declare the income for tax purposes, is it really worth the expense of making my business an LLC just for the legal protections provided? Your current situation may not justify setting up an LLC right now, but if you have longterm plans to grow and develop your business, that should certainly be on your list of things to do. In addition to legal protections, an LLC provides for certain tax benefits. For example, you may deduct ordinary and necessary business expenses (including the cost of setting up the LLC). This lowers your net business profit and your ultimate tax bill. However, you should huddle with your tax advisor for guidance on how best to arrange your affairs to maximize the personal benefits you can enjoy from business expenditures. Hermas
mommybeth2007: From a financial perspective, when does it become worth it/necessary to move from a sole proprietorship to an LLC? I mean, if I barely make enough to even declare the income for tax purposes, is it really worth the expense of making my business an LLC just for the legal protections provided? Hi MommyBeth, No need to set up an LLC unless you are confident that you'll need that structure at some point in the future. Why do most do it? If you plan on adding personnel to the mix it's advantageous to set up an LLC. If you need to increase liability protection consider it. But, it has to be set up correctly and you need to keep "minutes" just as you do with a corporation. You have to tend to your "articles" as you do with a corporation. If it's just liability protection you seek, then look into liability insurance first. Also know that an LLC costs more to set up and maintain. It costs more at tax time. It's more work in general. If you're just going to use ads and affiliate marketing as a monetization method, then stick with a sole proprietorship. Though it costs money and you will have to restructure if you decide to upgrade to an LLC at a later date, at least know that you have the option. One last note - with an LLC it's a little more difficult to withdraw funds for "whatever" whereas it's simple to do with a sole proprietorship. With an LLC you have to assign a salary and it can be a little bit of a pain to justify on paper paying yourself additional "pay". It all requires some decent research and you should have one or more very good reasons for going the LLC route ~Newbie Shield~
Thought I would mention you can choose to be taxed as an s-corp with an LLC as well. Then you pay yourself a reasonable salary and take the rest of the profits as a distribution thus saving some money on taxes, etc...
The best thing to do is talk to a CPA or Tax attorney or corporate structuring specialist. ***This is my experience only. Not legal advice.*** For getting started there is usually no reason to spend the money and setup an entity. Unless you are making a substantial investment or doing something with a high degree of risk of getting sued. The structuring guy I worked with doesn't recommend LLC's. The rules that make them "easy" strip some of the best features for making your assets absolutely untouchable.
I choose to be an LLC to get the same benefits as a regular corporation and to protect my home and personal assets from being liable. It cost me about $300 to have it set up and took a couple to weeks to be completely processed.
Ann Williams: It cost me about $300 to have it set up and took a couple to weeks to be completely processed. Do consider the on going costs that are required to maintain the LLC. Though some countries do not require LLC's accounts to be audited by an independent auditor if their turnover or assets has not reached certain threshold.
