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  1. #1
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    Tax and info question for Florida Ecommerce
    I am looking to start a new E-commerce website, but I am not sure if I should register as a sole proprietor or a LLC. I am a Business college student and have only taken 2 Accounting classes so I am not one that knows a lot about updated taxes and business laws.

    Also I have noticed a lot of affiliate programs ask me for either my tax id or SSN. I really don't feel comfortable given out my SSN since I have been a victim of check fraud and identity theft. And I do not have a TAX ID.

    Does anyone in Florida have any advice? Remember I am a college student, I want to pay as little in taxes, but at the same time stay legit.

  2. #2
    Affiliate Manager Matt McWilliams's Avatar
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    Quote Originally Posted by Davecore
    I really don't feel comfortable given out my SSN since I have been a victim of check fraud and identity theft.
    I don't blame you on this one...

    My advice is to get a tax ID...simple as that may sound. It's free and you get get a DBA (doing Business As) checking account on a individual account (read: free checking) at most banks with this. I am not sure about state laws, but I am fairly certain that federally, if you operate the business as being self-employed, you don't pay anymore taxes than normal (unless you count paying both portions of Social Security, which we both know is paid by the employee either way)
    Matt McWilliams
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  3. #3
    Affiliate Manager adambha's Avatar
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    Quote Originally Posted by MattMcWilliams
    My advice is to get a tax ID
    I agree, and it is very simple. It's IRS form SS-4 and you can either do it 'on paper' or even online, giving you the ID within about 5 minutes. Just search Google for 'SS-4' and you'll find a link to both the PDF and the Online Application. This is also referred to as an EIN (Employer Identification Number) but you do not have to be an 'employer' to have one. Also, this is a federal ID, you will most likely need to file an 'assumed name' or something similar with your state. Just search for your state's Department of Revenue (or taxation) and they'll probably have tons of useful info online.

    Quote Originally Posted by MattMcWilliams
    if you operate the business as being self-employed, you don't pay anymore taxes than normal (unless you count paying both portions of Social Security
    Matt, you're getting close, but you actually do pay more taxes when self-employed. As an 'employee' your employer will take out 7.65% for FICA (social security and medicare) and will then *match* that amount. So, as an employee you pay only 7.65% for FICA, but when self-employed you're actually paying 15.3% because since you are the employee *and* the employer you must also make the 'matching' payment.

    Now, I bet this wins the award for Most Boring Post...

  4. #4
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    Wow 15.35%!!!! It's there a certain amount though that I don't have to pay any taxes? Like less then $600/year? Also if I become a LLC won't that benefit me in taxes any way?

    Another thing is if I am the only person in the business as well as reinvesting a majority of the money back into the business do I get any break?

    I've seen so many websites on the web that sell stuff, do they all actually go through this whole process or can I just start selling?

    Another thing is if I am mainly starting off as a affiliate/price comparison site should I have the checks made out to the business or me? I was thinking of getting registered as a LLC and all and then opening a checking account. (Business or personal I am not sure yet, it seems like there is no benefit to a business all they do is charge you a fee or have a min. you must maintain.) Then register my business bank account with them. Does this sound like a good path to follow?

  5. #5
    Affiliate Manager adambha's Avatar
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    Quote Originally Posted by Davecore
    Wow 15.35%!!!! It's there a certain amount though that I don't have to pay any taxes? Like less then $600/year?
    The short answer is no, the long answer is, 'Read IRS Publication 17.' Tax issues have countless variables and are far to complex to answer here.

    Quote Originally Posted by Davecore
    Also if I become a LLC won't that benefit me in taxes any way?
    Again, the short answer is no. An LLC is more to protect you from liability, not from taxation.

    And honestly, if you're expecting to make less than $600/year, why would you be concerned with an effective tax avoidance strategy?

    Your best bet would be to seek out professional advice. You can probably find some 'free' advice as well. Do a search for a local SBDC (Small Business Development Center) or SCORE (Service Corps of Retired Executives) office. The sba.gov website has useful info as well...

  6. #6
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    If I plain on just being a price comparison site/ affiliate site do I even need to register really?

  7. #7
    Affiliate Manager adambha's Avatar
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    Quote Originally Posted by Davecore
    If I plain on just being a price comparison site/ affiliate site do I even need to register really?
    Technically, you could do business as a sole proprietor using your SSN.

  8. #8
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    That is true, but I really don't like giving my SSN out to anyone. So I think I want to register as a LLC mainly for the liability protection and all.

    I just get confused with the whole tax thing, as well as with all of the required things I must do to protect my company's name, logos, and content.

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