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Hello everyone. just a quick question here. I'm starting out in the biz, as an affiliate partner, promoting sites (free sites, gallery pages and the such.) My question is:
As a promotions business.. would it be better for me to incorporate myself or become a sole proprietor? (considering I would only be promoting other people's sites? since the beautiful words "taxes" exist :P )
Check out this article and see which option you feel more comfortable with.
http://forums.gaywidewebmasters.com/...ead.php?t=2178
Personally, i'd incorporate as it offers you a little more legal protection should you ever need it :)
Regards,
Lee
thank you for that link Lee, it was exceptionally helpful! as well I will research more on that , thank you
Do NOT go as a sole proprietor. There are so many options--an LLC can afford you the protection of a corporation but flow-through taxation like a partnership, for example. You should sit down with someone who is familiar with the entities available in your state and choose the one that best fits your situation. A sole Proprietorship is rarely the best way to go.
Martin
Where do you live, out of curiousity?
I have an opinion on this "from the trenches" - not as a lawyer... nor as an accountant. That is, if you are starting out, and simply promoting affiliate programs, incorporating is not that big a deal. You can simply tell the affiliate programs to make out checks to your name.
This is how I started. I pretty much asked myself if freelance writers formed a corporation, and submitted their writing to magazines. I would think that most do not.
You don't have enployees, and you are being paid on a performance basis. Your exposure to the kinds of liability from which a corporate entity shields is minimal.
Also in the United States now, personal income tax rates in many cases are lower then corporate income tax rates. It also depends on the state you live in. Texas happens to be one of the more expensive states to operate a corporation in... we have a corporate franchise tax.
I really didn't want, nor could I afford, an accountant to handle that for me.
In other words - if you are starting this as a side business.... and you are collecting $500 or $700 a month from several affiliate programs - just operate under your name or a DBA. And then declare the 1099 income on your taxes.
[ and of course track your business expenses for deductions - like mileage, your trip to the Phoenix Forum, etc. ]
Steve
The taxation issues are almost a non-issue now as both S corporations and LLCs allow pass-through of income to individual shareholders so the income is taxed once at the lower individual taxation rate.
HOWEVER, the big bugaboo is liability. Particularly in this biz, I would suggest having a corporation or LLC to at least partially shield oneself from liability is an expense worth having. It all depends on your particular intestinal fortitude and risk aversion.
Note also that while a corporation may sheild you from personal liability, it will in no way shield you from criminal action, such as failure to maintain proper records required under 2257, having underage models on your site, that sort of thing. So ya still gotta be careful.
wow great help everyone!! I'm living in Canada actually, so the laws are a bit different, although I don't much about the laws here so I would definately have to hire a lawyer
I run my site as a service of my photography studio. I list OOTC as a service provided by Trent Studios. When people make out checks it makes sense to them that my production company runs a promotional website.
My accountant agrees with me on that. I'm needing to change that though because as my videos become more edgy, I feel I'm taking larger risks. I want my personal assets protected so an incorporated company requires me listing the assets of only OOTC. This ensures that if I get sued, only my business assets with OOTC can be taken. Since I also run another website that has nothing to do with OOTC, I want to protect that one.
If this is your main income, you may consider incorprate since it will bring you some benefits like lower tax rate, limited liability,more deduction etc. However, it is not a free lunch. In Canada, you probably need to spend $1000-$1500 to get incorporated. Plus, according to the rules, you should be prepared for the audit. In order to incorporate, you need to find a good "business lawer". You also need a experienced accountant and someone good at book keeping. One thing for sure, if you are planning to get your own merchant account, it is almost necessay to get incorporated. (unless some offsore merchant account :uhoh: .)
:baby:
When you open a US Business how do you pay your taxes in canada
I grew up as a corporate CPA and the more time I spent looking that the "new" laws the less I knew.
But there is something called "piercing the corporate veil".
http://www.rjmintz.com/piercing-the-corporate-veil.html and others URL's.
In summary, if you are looking only to save your ass in case of wrong doing this is NOT a great idea. They will prove that one shareholder that is the only investor, exectutive and employee is not a corporation but a shield.
Courts will look through the "protection" and stip the corporation (veil) and you will loose anything that you were trying to protect.
If it's a true corporation you will have multiple investors, board of directors, and all the items you need for a corporation. Miss one item and the courts will rull you as an individual acting a a sole business owner.
So...
Accountant and Attorney is your friend.
The more you try to protect yourself the more $$ it will cost.
Look at the worst case and go from there.
Gosh..I hate this type of dread.
But I'm sure there will be other thoughts on this topic.
Just ask youself..."what if I'm wrong?"
Steven
Years ago, I had an issue where I was concerned about the corporate veil being pierced in a legal action. When I discussed it with the attorney at the time (things may have changed since then), he basically said that the only circumstances under which the corporate veil could actually be pierced is if it was pretty clear that the organization was set up specifically to shield against lawsuits, with no assets or business activity to speak of.
In other words, a shell corporation that does absolutely nothing, has no assets, no employees/customers, etc. He said that he'd had some cases where somebody was *clearly* trying to scam people (I think it was an aluminum siding scam or something) and the assets immediately went out of the corporation to somewhere else, there was basically just a shell, and they STILL couldn't get past the corporation to the personal assets because there was at least a minimal amount of business being transacted through the corporation.
So if you're using the corporation to legitimately conduct your business, carefully separating personal and business expenses and not paying your personal expenses with the business funds and vice-versa, and basically operating like a business, the advice I got was that you should have no problem.
Of course, IANAL and your mileage may vary :)
Not only do you get legal protection from your personal assets.....I have found that you can save more on taxes as well. Hope this helps.
You need to incorparate no matter what business you are in. Even non porn.
Here's an example-
You sell a blender on Ebay and don't give a warning with the blender that it may hurt a child. A child makes a smoothies of his fingers. The person who bought the blender couldsue you. Of course you could goto manufacturer and say its their fault. But you get the point.
If you do not have some company and have assets they are fair game.
Just my opinion.
I think people are confused. Several people have mentioned that you must incorporate to be shielded from liability, but this isn't true. An LLC provides the same liability protection that a corporation does... that's why the LLC was created in the 80s, to provide the liability shielding without the tax burden of a corporation. Hence the name "LIMITED LIABILITY company."
What I meant is you need something besides a sole prop.
I personally DO NOT like LLC for various reasons, which is WAY beyond the scope of this thread as I am not going that deep into my financials.
There is a really god book for like $15 that goes into each and the advantages and disadvantages of each.
Another thing you want to consider besides the liabilty factor is:
1. What happens if you become very successful and someone wants to buy your business. Depending on what TYPE of company you set up, it is easier to sell.
A LLC for me is too closely tied to a sole prop. IF the time comes to sell. Even though it is easier than a sole prop to sell, but not as easy as if you INC.
Just my thoughts.
I am not an accountant, nor do I play one on TV. However, I have been told that if you have a business that creates a lot of assets that are likely to increase in value (such as, for example, content that you shoot), there are very significant tax advantages to having that company (or at least those assets) owned by an LLC, *particularly* when you go to sell the company.Quote:
Originally Posted by abostonboy
And, realistically, anyone who knows anything about buying an existing company knows the standard procedure is to purchase the assets without the liabilities anyway, so whether it's a proprietorship, LLC, or corporation really makes no difference in that regard, other than the tax ramifications to the seller, which are decidedly *not* advantageous for a corporation.
That said, MRC (the company that owns Gaybucks and 18West among our other properties) is a corporation. We are in the process of creating multiple entities to better manage our tax liabilities and better protect our assets. And we're using people far more qualified than just about anyone here to help us.
Honestly, I would suggest that anyone who is deciding what sort of entity to form find a CPA or tax planner who is well versed and experienced with the adult industry (or at least the mainstream entertainment industry) and rely on his or her advice. The nuances of the different structures (not to mention C vs S corps, various LLC structures, etc.) are way beyond my knowledge, or perhaps any of the regulars here with the possible exception of Chad.
All I can say is that I sold a LLC and wish I had not created the company that way. Part had to do with the recors keeping requirements and the reports you have to file. Corps require more, but they also show the value much more. And when other partners are involed, well thats a whole other issue.
I wouldnt talk to a CPA, I would talk to a corporate lawyer. That is the only way to go.
ALWAYS incorporate. That is the absolute best way to cover your ass.
If you are a Canadian Citizen and want to open and operate any business in the US you better make sure that you have the right kind of visa to do so. The penalties can be very stiff...and not stiff in a good way.Quote:
Originally Posted by pierrefitch
http://www.sba.gov/ A very good info link.
I prefer running a DBA, but with this biz, we went with an LLC, because.
We have investors and realestate to protect.
An LLC in TEXAS can deduct 100% of all medical expenses, straight off the top.
Less reporting than an S Corp, an LLC is fluid and easy to back track.
Quote:
Originally Posted by abostonboy
Err pardon me dear boy .... is that Your basket in the avitar?
Pierre,Quote:
Originally Posted by pierrefitch
As a canadian domiciled corporation, the majority of company receivables comes form the U.S. however, my corporation is not running a business in the U.S.
Is your question related the twist and turns we canadians need to do in order to get our visa merchant accounts for credit card billing?
I am in Ontario:) :) and would be happy to speak directly if you wanted to explain they way that I have organized doing business in the U.S.
Patrik,Quote:
Originally Posted by Patrikyyz
I'm also a webmaster in Ontario (Toronto) and i'm in the process of setting up my US company. I would love to chat with you regarding this.
I'm going with a CCBill US account, which requires that i have a US Company and Address. That's been taken care of, but i'm confused on how i should setup the payment structure etc (ie. should my US Comp make money, or should my US Comp payout all it’s income to my Canadian Comp?)
I'll send you a PVT with my contact info.
Thanks!
Allan