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  1. #1
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    I know there's quite a range of AM'ers on here--everything from making a few dollars a month to thousands a month.

    My question is this. For the larger businesses run by either an individual or a husband/wife team, do you have a business license with your local government (city, county, or state)?

    I'm looking into taking over an existing site that brings in a decent (not great) amount of traffic. Hopefully, I can Google-ize it and make more. I'm running this site with my wife, so we can just take care of the taxes on our personal income taxes. In other words, we're running it as a sole proprietorship (me being the one running it). Do I need a business license?

    I only ask because there is no physical storefront and no customers will be coming to a physical business. It's just me, my wife, and a computer.

    Thanks!

    Michael

  2. #2
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    It's highly localized and depends on your local and state laws, and whether you will be "Doing Business As" yourself or under a company name. In that case, if it is just you or you and your wife, you would likely just need a "DBA" if your local laws require it. A DBA simply means "Doing Business As" and is essentially a way of identifying you as associated with that business.

    I just do business under my own name as I was a freelance web developer and am still essentially the same thing; only I've changed my business model. When my income gets to a certain point I do intend to incorporate if only as a means of separating personal and business property as a protection in case of litigation, etc.

    (added on edit) : Nonetheless, I would urge you to research local and state laws where you live to cover yourself.


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  3. #3
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    For tax purposes it's a real good idea to incorporate, especially as a Nevada or Delaware corporation to avoid paying any state income tax. You also get asset and liability protection as well.

    Tony Felice
    http://www.xlmarketing.net

  4. #4
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    oooh see I didn't know that re:state income tax - now I know why so many PA banks have their main office in Delaware. I was going to wait until I could afford a good accountant to investigate incorporating.

    That brings me to another point - as soon as you are starting to make money, hire a good accountant. It will save you money in the long run.

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  5. #5
    Affiliate Manager Lionstail's Avatar
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    Regarding that income tax issue, do you know anything about state tax IDs? I've incorporated and am looking into dropshipping, but lots of places are asking for state tax IDs. My assumption was that these are for local businesses, not for internet businesses with no local presence, but I don't know this for sure. I'd certainly like to avoid state tax and the formality of getting state tax IDs and yet still be able to sell my goods nationwide. Any help would be greatly appreciated.

  6. #6
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    IMHO these kinds of questions would make good food for a new forum - maybe we should suggest a "Doing Business forum" or "Small business for Affiliates" forum...

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  7. #7
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by eaglefire:
    IMHO these kinds of questions would make good food for a new forum - maybe we should suggest a "Doing Business forum" or "Small business for Affiliates" forum...
    <HR></BLOCKQUOTE>

    I definitely second that suggestion. There's a lot of different ways to go about business--it would be nice (and interesting) to see how others do it, too.

    I would call it either "Small Business for Affiliates" or "Running Small Affiliate Businesses". Or something to that effect.

    What do we need to do to get this done?

    Michael

  8. #8
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    Just suggest it here

    http://abw.infopop.cc/6/ubb.x?a=frm&...79&f=125601789

    and folks will likely chime in to support it. If enough people voice support, or even if they don't and it sounds like a good idea to Haiko (the board owner) then it will become a reality.

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  9. #9
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    Nevermind I just posted it here:

    http://abw.infopop.cc/6/ubb.x?a=tpc&...211#6346097211

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  10. #10
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    State ids are normally vendor ids - they want to make sure you are purchasing the items for resale. When you do this, you do not pay taxes. Most wholesalers or distributors require you have a vendor lisc.

    In ohio they are ony $15 a year, but then you have to make sure you track and report all sales tax for your state.

    Chet

  11. #11
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    I operate as a sole proprietor and do not need a business license in my state. However, I'd suggest you hire an accountant to do your taxes and keep you up on all that tax stuff. That is what I did.

    "Not until you open your eyes, will you see the pot at the end of the rainbow - So Dream Big or Don't Dream at All"

    JadaKiss

  12. #12
    Chick with Brains Tracy's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Regarding that income tax issue, do you know anything about state tax IDs?<HR></BLOCKQUOTE>

    State tax IDs don't necessarily have anything to do with income tax. You may be thinking about sales tax, which is a different story. As a general rule, if you sell and ship something to a different state from the one you live in, then you are not obligated to collect and report sales tax. However, if you ship something to the same state you live in then you are probably liable for collecting the sales tax.

    For instance, I sell copies of my mother's cookbook. I charge everybody the same price plus S&H. However, if somebody orders a copy of the book to be shipped to an address in Florida, I back out the sales tax and report it to the State of Florida.

    When you purchase items for resale, many companies require you to supply them with your Sales Tax ID number as proof that you are a valid vendor who is in business to resell items.

    This is why when you shop at different sites, they only charge sales tax if you live in certain states. It is because they only actually do business in and ship from those states.

    ---
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  13. #13
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    My understanding is that you need a DBA (Doing Business As) for any name that you use for collecting money (other than your own proper name). If your checks come in the name of your website, then you must hava a DBA for your web site. Really bad things can happen to you if you are doing business under a name that is not registered as a DBA.

    It is a good idea to get a DBA for your web site name. The DBA gives you a little bit of extra legal protection. You will probably want to check with your local business administration. As I recall, having a DBA prevents someone from Trade marking the name of your web site.

    In my state, you only need a business license for certain types of businesses. You would need one to sell insurance, run a day care facility, etc. Your local business adminstration office will carry a list of things requiring a license.

    I would not be surprised if someday states require a business license to run email campaigns, but I don't think there will be problems with running ads on a web page.

    You need a sales tax id if you are selling a product. If you are selling stuff on eBay, or through Amazon, you should consider getting a tax id. You will end up needing to pay taxes on any in state purchases.

    The really big question is whether or not you want to incorporate. You will probably want to check with a local accountant on that issue. Commissioned sales don't have as high a liability risk as other activities, but you might find someone hitting you up for running a misleading ad.

    As there is more and more legislation about spam, you might find yourself on the losing end of a legal battle over an email campaign. If you have a sizeable chunk of change coming in, you will definitely want the liability protection and tax advantages of incorporation.

    There is probably a local business center that can answer your questions about what is required in your community.

    My experience is the the government doesn't like stomping on small hobby sites, but as soon as you have a real business, you better have a full business plan with all the i's dotted and t's crossed.

    Currently, I am still working as a sole proprietorship in my own name, since my sites are clearly hobby sites. But if I ever get serious, I will do the paperwork and become a real business.

    Missoula - Short Stories

  14. #14
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>IMHO these kinds of questions would make good food for a new forum - maybe we should suggest a "Doing Business forum" or "Small business for Affiliates" forum...<HR></BLOCKQUOTE>


    agreed. meant to suggest that myself ....

  15. #15
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    There can be a lot of differences between all the regulations for all the issues brought up so far depending on where you live. The first two places you should contact to find out what you have to do in your city and state is your Secretary of State and your local City Hall. Pretty much all Secretary of State offices have web sites (just do a search for your state) and my state actually has most small business info you need on-line.

    For me, I had to have an occupational license through my city for a home based business. This was for the site I have where I actually ship products. I also had to get a sales tax ID (which is what organic was asking about), and a DBA (and the bank required proof of my occupational license to set that up). Whether or not I would have had to have a occupational license for just AM I don't know, but they would have told me at City Hall.

    Another great free and in some instances low cost resource is the SBA (Small Business Association). I've gone to a couple of their seminars for like $10 registration and have gone in for personal consultation for free. You can get free review and help with business plans, marketing plans, etc. They also have the SCORE program which is retired businessmen who volunteer their consulting services. This is an excellent resource if you are considering incorporation. It can save you alot in legal fees. They can help you determine if it's the right time for you to incorporate and help you decide which type of incorporation is best for you. You may also want to run it past your accountant since you will then have 2 sets of taxes to pay: personal income for what you take out of the corporation as pay and corporate taxes for what the business makes. But at some point, that probably is still more cost effective for the business since there are evidently deductions a corporation can take that a person can't.

  16. #16
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    Regarding sales tax, would you be responsible for collecting sales tax if you charge a membership fee to access your site. This is not really a tangible product, but I was wondering if anyone knows how states look at this.

  17. #17
    Affiliate Manager Lionstail's Avatar
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    Thanks all for helping me clarify this, though I must admit that I'm at least as confused as before. Let me make the question a bit more concrete in the hope of getting greater clarity.

    Let's say that I'm incorporated in Delaware, that my primary place of business and home location is California, and that I sell products over the internet to buyers in Delaware, California, Florida, Idaho, and Ohio. Which if any of these states would I need a state sales ID for? If it is only Delaware or California or even both, that is no big deal. Could it be possible that I'd need it for all 5?

    Thanks, Dave

  18. #18
    Defender of Truth, Justice and the Affiliate Way
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    @Wayne: each states sales tax laws are different. And change frequently. You would need to check with your state's IRS and they could let you know if that type of situation requires sales tax.

    @Organic: Glad we could clear that up for you. [img]/infopop/emoticons/icon_biggrin.gif[/img] Again every state is different. Also not all states have sales tax. DE does not have a sales tax, so the issue of whether or not you have to collect for the state you are incorporated in becomes a mute point. However if you are shipping products out of CA, then you would be responsible for CA sales tax laws. If a state collects sales tax then it is based from the state product is sold in when the product is received in that same state. So if you ship from CA to a CA address, then sales tax has to be applied. If you ship to any other state, sales tax is not collected. This is a wonderful thing to remember when you are on vacation or traveling and shopping. Many merchants (particularly bigger chain stores) will ship it to your home address for free or very low costs and then sales tax isn't charged. [img]/infopop/emoticons/icon_biggrin.gif[/img] I've done this numerous times. A lot of times, even if they charge a shipping fee, it's cheaper than the sales tax. You can pick up those big ticket items for less and not have to deal with getting the item home.

    Here's a link to a chart that lists sales tax rates by state: Sales Tax Rates

  19. #19
    ABW Ambassador John Kruger's Avatar
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    You should check with your states Department of Revenue (or equivalent). I have my business set up as an Limited Liability Corporation, it is the best of a Sole Proprietorship and a Corporation. It was a single form and had a minimal cost.

    Once a year, go someplace you've never been before.

  20. #20
    Chick with Brains Tracy's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>I have my business set up as an Limited Liability Corporation, it is the best of a Sole Proprietorship and a Corporation. It was a single form and had a minimal cost.<HR></BLOCKQUOTE>

    A friend of mine recently started a new brick and mortar business. It was suggested to her that she form it under a LLC. When she visited her accountant, he said a Subchapter S Corporation would be better from a tax aspect.

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  21. #21
    Chick with Brains Tracy's Avatar
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    Regarding the DBA. I think you need that if say your name is John Smith and you're a sole proprietorship operating business called ABC Company. Of course, if you're ABC Corporation, and doing business as The Flower House, you would also need a DBA. However, a DBA has nothing to do with an occupational license. Whether you have a DBA or not, you still may have to have an occupational license. Where I live you have to have a county occupational license. However, businesses within the "city limits" also have to have a city occupational license.

    The Small Business Administration would be a good place to start to get the answers to all these questions. There is no one answer for any of us, since we all live in different states, counties and cities, all of which have their own rules and regulations.

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