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  1. #1
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    Legal aspects of Affiliate Marketing (How create Company and open Bank account)
    I think this question is very actual also requires discussion! Therefore I suggest everyone to offer the legal scheme! The most important questions is:
    MINIMIZATION of TAXES and HIGH SPEED (QUALITY) of BANK SERVICE

    I suggest you to consider LLP (Limited Liability Partnership) - UK companies!

  2. #2
    Affiliate Manager bcwaller's Avatar
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    There is a lot to consider, and it varies by location. Even in the USA, where there are different implications in each state. Generally you are best forming something other than a general partnership, but you have to be aware of tax issues and corporate fees. If you are going to pay the state a few hundred dollars in taxes and fees to be a corporation, you better be getting more in benefits for the corporation.

    I'd advise you to talk to a tax professional and possibly a corporate specialist in your location and ask them about legal liability, insurance, taxation, and whatever else might be important to you. It would be unfortunate if you just used online advice and found out that you made a mistake and are being taxed twice on income.

    We chose a C corporation for one business, and an S corporation for another. Maybe the next will be an LLC?
    Brad Waller | VP, Business and Affiliate Development
    EPage.com

  3. #3
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    Real benefit of setting up an entity is often the liability protection (not a bax benefit).. if you're doing business through any number of types of entities (LLC, LP, Inc.) if another party were to go after you legally, they couldn't attach any judgment or other liability to you personally.

    From a tax perspective, I echo bcwaller... find a tax consultant. Most entities (LLC's, LP's, S-Corp's -- NOT C-Corp's) can be tax pass through entities (which means the tax obligations roll up to the individual(s) who own the entities. Hard to minimize tax obligations (legally) just by setting up an entity.

    Would be curious to know how many affiliates do business individually and how many do business through a legal entity?

    Quote Originally Posted by bcwaller
    We chose a C corporation for one business, and an S corporation for another.
    Why would you do a C-Corporation as an affiliate? Can't think of any benefits over S-Corp or LLC... and you get double taxed. What was the rationale?

  4. #4
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    Quote Originally Posted by bcwaller
    I'd advise you to talk to a tax professional and possibly a corporate specialist in your location and ask them about legal liability, insurance, taxation, and whatever else might be important to you. It would be unfortunate if you just used online advice and found out that you made a mistake and are being taxed twice on income.
    Certainly I went to the adviser and he has answered me, that if activity is conducted everywhere except the Great Britain then it is possible to use LLP and not to pay any corporate taxes. LLP has dual legal structure. This partnership in which is absent the corporate tax, i.e. each partner should pay the tax individually! Partners should be at least 2 and if they are from offshore jurisdictions then will not pay taxes!

  5. #5
    Affiliate Manager Howard Gottlieb's Avatar
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    I think just about any small business should be set up as LLC or S Corp. All the businesses we have owned have been S Corp. It gives you a lot of freedom and adequate protection, although in AM I can't see a ton of liability.

    It's always best to talk to a tax specialist and let them know your business plan, how you will operate, what kind of projected cash flow you have, whether its an entity with multiple owners, whether you intend to some day sell it, etc. A decent CPA will steer you in the right direction.
    I would rather live my life as if there is a God and die
    to find out there isn't, than live my life as if there
    isn't and die to find out there is.

  6. #6
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    Quote Originally Posted by visitourmall
    I think just about any small business should be set up as LLC or S Corp. All the businesses we have owned have been S Corp. It gives you a lot of freedom and adequate protection
    Agree. We've done more LLC's than S-Corp's, but both give you good protection. To Galant's point on 2 partners, LLC's (and I think S-Corp's) can be setup with a single member (at least in the US).

  7. #7
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    Quote Originally Posted by Janus
    Agree. We've done more LLC's than S-Corp's, but both give you good protection. To Galant's point on 2 partners, LLC's (and I think S-Corp's) can be setup with a single member (at least in the US).
    It has no value how many partners 1 or 2 or 3 - all of them nominee!
    Main advantage LLP - absence of the corporate tax. The main lack - it is difficult to find solid bank (to receive Direct Deposit - checks are very long, it know all).

    Meanwhile main advantage LLC - banking in USA (Direct Deposit without problems), however a lack is the corporate tax! What rate of the corporate tax now in USA for LLC?

    And also somebody can tell, whether USA banks open now accounts for the non-resident companies (incorporated out of the USA) - for example for LLP (UK incorporation)?

  8. #8
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    You can make a tax pass through election on an LLC (and also on an S-Corp), which gives you the same tax benefit you're describing with the LLP... if you make such an election, there is no corporate tax -- the taxes flow through to the owners. At least in the US, you need 2 partners to form an LP - and the general partner actually can have some legal liability.

    I like LLC's better than S-Corp's because I think they give you more flexibility in structuring a variety of things - economic ownership arrangements for one (which may or may not be relevant to you). Once the LLC is formed (which can be done same day), it's never taken more than 24-hours for me to get a bank account opened (especially if you bank somewhere that knows you). Not sure re: foreign accounts... Hope that helps.

  9. #9
    Affiliate Manager bcwaller's Avatar
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    Quote Originally Posted by Janus
    Why would you do a C-Corporation as an affiliate? Can't think of any benefits over S-Corp or LLC... and you get double taxed. What was the rationale?
    Check my sig. I'm not an affiliate, but a merchant (EPage) and a service provider (AdJungle and AdConnect) to publishers. EPage is the S Corp, and AdJungle was created as a C corp back in the late '90s because we anticipated investors and other stuff that everyone wanted back in the pre-bubble days. You get double taxed, but you can sell shares and such with a C corporation.
    Brad Waller | VP, Business and Affiliate Development
    EPage.com

  10. #10
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    Quote Originally Posted by bcwaller
    ...you can sell shares and such with a C corporation.
    Yeah, that's the only reason for a c-corp anymore. Sorry I missed your sig... obviously makes more sense since you're a merchant! I was reading the thread from the affiliate perspective. Cheers.

  11. #11
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    With what percent of the corporate tax are assessed LLC?

  12. #12
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    Will be more correct probably to ask - What in general taxes should pay LLC?!

  13. #13
    Affiliate Manager bcwaller's Avatar
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    I'm not sure about the LLC taxes. I would assume (in most cases) that LLC taxes pass through to the owners. The LLC gives you a degree liability protection while offering similar taxation to a partnership. At least that is my understanding of LLC. Each state has different rules that might make a difference, check with a professional who KNOWS the exact answer.
    Brad Waller | VP, Business and Affiliate Development
    EPage.com

  14. #14
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    [QUOTE=bcwallerI would assume (in most cases) that LLC taxes pass through to the owners. [/QUOTE]
    You can make an election to treat the LLC as a partnership for tax purposes. If you make such an election, the taxes pass through to the owners at each owners personal tax rate. If you make the LLC a tax paying entity (rare that you would do this), then the LLC is charged at its corporate tax rate. LLC's give you great flexibility in structuring, offer good liability protection.

  15. #15
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    Quote Originally Posted by Janus
    You can make an election to treat the LLC as a partnership for tax purposes. If you make such an election, the taxes pass through to the owners at each owners personal tax rate. If you make the LLC a tax paying entity (rare that you would do this), then the LLC is charged at its corporate tax rate. LLC's give you great flexibility in structuring, offer good liability protection.
    As i understand LLC has two directions of the taxation (maybe more ):
    1. As the company with the corporate tax and the tax to the income of the proprietor of the company! Someone can set an example (in any state) % of the corporate tax and personal (the tax to incomes of the proprietor)?
    2. The partnership form! Absence of the corporate tax! However it is necessary to pay the tax to incomes of partners! What % of the tax to incomes of the physical person in the USA?

  16. #16
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    Taxes are based on earnings. There is no "one example'. Go to www.irs.gov and search for tax tables and you'll find what you're looking for. Very generally speaking, max fed+state would be ~45% - again, highly dependent on individual circumstances, earnings, and state. Hope that helps. A 15-min call to a tax advisor or CPA could answer your specifics.

  17. #17
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    I come to conclusion, that for Affiliate Marketing Business most of all approaches LLC company in spite of the fact that have many taxation! American company can quickly Receive payments from advertising brokers (Direct Deposit) unlike checks. And besides there are no problems with bank account opening! And still I heard, that owning such company some years, it is possible to receive USA citizenship!

  18. #18
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    Gues!

    Whether Somebody can learn in the bank - they open account for non-resident companies (for example - LLP - UK incorporation)?

    And as, somebody cashed the check bank addressed to LLC? How the bank reacts to it, after all money under the check can be "withdrawn"?

    Sincerely!

  19. #19
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    Quote Originally Posted by Galant
    Gues!

    Whether Somebody can learn in the bank - they open account for non-resident companies (for example - LLP - UK incorporation)?

    And as, somebody cashed the check bank addressed to LLC? How the bank reacts to it, after all money under the check can be "withdrawn"?

    Sincerely!
    You can't open a U.S. bank account as a non-resident company. You will need a U.S company - Delaware or Nevada usually works best for non U.S. residents. With the company you can obtain your EIN and bank account and you will then conduct your banking through the U.S. company.

    About the check, different banks react differently but if you have a branch in a major city "some" will work with you. For instance we have a client who cashes their Euro checks through their bank but it's a bit of a pain.

    if you're a foreigner looking to open a U.S. company feel free to pm me since this thread is not so much about foreign companies.

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