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  1. #1
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    June 17th, 2010
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    Business Entity Question - Looking for Info
    Hi All,

    I'm new to the site, and first off I'd like to say this is a wonderful resource with lots of amazing information. I've gone through this particular forum and have read quite a bit of the 'which entity to form' threads, and they have definitely helped. I still have a bit of a dilemma though. I tend to overanalyze things, and while I'm getting better about not doing that, it's still a challenge of mine. I can see the benefits of forming an LLC or S-Corp in the long run, but I'm just starting and don't have any income or anything in this business yet. I want to get started as an affiliate and promote products, and I know I should get an EIN for this. The process for this looks very simple, not requiring any formal business formation (sole proprietorship seems to be 'created' by default in the process, (as self employed or independent contractor).

    My main question is, is getting an EIN as a sole proprietor, simply under my name a good way to start? After 6 months, if I have a number of sites and accounts linked to this EIN, I imagine I either need to change all of that if I form an LLC, or leave them and simply have two EINs (one for sole proprietorship, the other for LLC). Has anyone followed this path? I feel like I'm over thinking things to the point of inaction, and I know ultimately I need to talk with a tax and possibly legal professional. I just wanted to see what the community here thought, and if this path was one taken by any others who could provide some anecdotes on their experience.

    Thanks In Advance,
    Danny

  2. #2
    OPM and Moderator Chuck Hamrick's Avatar
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    April 5th, 2005
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    Danny there is no need for EIN as an affiliate unless you want to open a business checking account. You will be 1099'd by each network and private program at the end of the year. That goes against your SSN and is just additional income. Even if you form an LLC you do not shelter yourself from personal income tax. I am no tax expert so consult a CPA.

  3. #3
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    June 17th, 2010
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    Thanks so much for the information Chuck! Mostly I wanted the EIN to avoid putting my SSN in all of those fields (i.e. Clickbank, etc). The reason for thinking of an LLC was simply for better organization, and perhaps liability protection down the road should I also decide to start creating products, if my business is growing. I'm not trying to avoid personal income tax (well, let's just say that isn't the goal for this ) I'm mostly just trying to make sure I get started off on the right foot and don't have a huge headache on my hands down the road. So it sounds like SSN or an EIN as a SP is pretty common.

  4. #4
    OPM and Moderator Chuck Hamrick's Avatar
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    Good point and smart to separate the two. When I talked to a CPA about setting up an LLC I considered Utah (where I live), Nevada or Delaware. With Nevada or Delaware I could screen my identity which is not of concern to me. I was interested because they do not charge corporate taxes. Doesn't matter because the state you reside in dictates the tax you pay. An S-corp can help you split the self employment tax in half (15.3%) but then you have to do quarterly filings (added cost). So from a small business perspective with no partners an LLC works just like a sole proprietorship.

  5. #5
    Prince of Content Vinny O'Hare's Avatar
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    January 18th, 2005
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    Danny you ask some good questions. I had them also when I started. You should talk to a local cpa and explain your situation. Odds are it won't cost you as they would be happy to get your business later.

    One of our clients CorpNet has a lot of useful information on the subject. Vist CorpNet and do some research. Like I said the best advice on which type of corporation to form will probably come from your local tax adviser.
    Vinny O'Hare - OPM - Contact Info email: vinny at teamloxly.com ~ 702-582-6742 Twitter

  6. #6
    OPM and Moderator Chuck Hamrick's Avatar
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    I met with my CPA twice and he didn't charge me until he had to do the actual tax work.

  7. #7
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    June 17th, 2010
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    Awesome, thanks for the help guys, I really appreciate it! I'm going to get in touch with an accountant and get rolling from there.

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