united-states, legal, business-registration, georgiaWanted to verify I could ask these type of questions first: https://startups.meta.stackexchange.com/questions/72/are-legal-questions-regarding-formation-of-a-business-entity-e-g-llc-inc-ltd
I’m interested in monetizing my blog and connecting with several affiliate programs such as Amazon Associates. I am the only person involved and I would really just like to separate my personal income from my affiliate income. In addition to that, I am in interested in writing off simple costs such as hosting, domain registration and PPC advertising. Any recommendations? Thank you.
Location: Georgia, United States
The affiliate program will receive income from the Ads and you need to setup some entity that can accept those funds. That will either be yourself or some stand alone company. If you want to separate your income from the affiliate program, then you must setup a new legal entity that is incorporated in your state or even Deleware due to their simple registration process.
You have many options when registering a new company and need to made an informed decision first for the legal structure. It can be any of these:
Sole Proprietorships - Not seperate and all income (and losses and legal debts) are your directly.
Corporations - separate entity that files its own annual taxes and all income (and legal debt) is separate.
S Corporations - Subject to the same filing requirements as a regular Corporation, however has a pass-through tax status that is similar to a partnership, though filed on a different addendum to your personal return. This makes life a little bit easier by avoiding the need to calculate corporate taxes and file a corporate tax return. It is also great if you have a lot of business losses that you wish to deduct from some of your personal income. It’s not separate from your income, but is highly preferred because it avoided the double taxation of corporations and provides you with legal protections.
Limited Liability Company (LLC) - usually need 2 people to file for this. Check Georgia law if they allow for single-member LLCs. Less requirements for filing than a corporation. This is known as a pass through entity since all income and expenses flow through to your personal tax return. You can deduct the expenses that helped generate the revenue, but it will be on your tax return.
The only way to completely separate the revenue and expenses from your income is with a corporation, but that will get expensive and involves significant paperwork. A simple llc will allow you to deduce expenses and provides legal benefits. Search for other blogs and see how they are setup. All LLCs are public entities. All you need to know is the name of someone that setup a corporation or llc and they should be in the state database. Here is Georgia’s.
Agree with ErstwhileIII. You don’t need a company. Whoever pays you will issue 1099 form at the end of the year. That’s going to be your income “separated” from the rest of your income be it W2 another 1099, K1 or else.
You can write off expenses without opening a company. Those typically include all relevant such as hosting and some less relevant expenses such as food & entertainment at 50% rate, miles driven on your personal car for business purposes at about $0.55/mile rate (varies every year), business related travel, etc.
All that can be written off without opening a company. Talk to your accountant though. He will advise you on how to properly do it (which bank account to use, what to keep track of, whether you need to pay taxes during the year to avoid fines for being negative too much, etc.). Definitely do that before the end of the calendar year, so you have time to move money properly if need to.
You don’t need to form a company to separate your blog income from earned income. You, first, need to account for your blog business as a business (home office, computer, advertising, etc.). For extra protection, you could form a LLC … in the US this provides you the choice to have income pass-through and be treated like personal income (if tax preferable), or to have it taxed like a Corporate entity. Check out US IRS guidelines on LLC. Check out local Federal Government Small Business information, webinars and meetings also.
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