Question regarding businesses and income

Discussion in 'BlackHat Lounge' started by daveslaine, Nov 23, 2012.

  1. daveslaine

    daveslaine Newbie

    Joined:
    Aug 24, 2010
    Messages:
    47
    Likes Received:
    22
    Hi, sorry for the thread being here, I didn't know where else to post.

    Anyway, I have a question. At what point am I making too much money to the point where I suddenly have to "upgrade".

    What I mean is.

    I have a website being developed currently.

    All I really have is my paypal pro account and my bank account. My website is NOT a company, or not even a business, its just a website that gets money.

    Now lets say after some months, some advertising, and some SEO, my site gets around $1000 a day....... at which point am I making so much money that I have government and or officials buttF****g me for taxes or other shit?

    Also, is it illegal, lets say, it pulls $10K a day, is it at that point where they will be pissed off that I have not made it into a company or corp, or can I just go solo with it.....

    The reason I ask is because I dont want to get into legal trouble. And I honestly have no idea how this works at all. I can imagine just having a site up that pulls that much money, but wouldnt the powers that be ask where and how Im making that money, and what I should do about it?
     
  2. reallife

    reallife Jr. VIP Jr. VIP

    Joined:
    Apr 2, 2010
    Messages:
    2,676
    Likes Received:
    603
    You *always* have to pay taxes on your income. It's your responsibility to know how to do that - not the government's to come after you. If they come after you, you're already in trouble.
    You can operate as a sole proprietor, there's no need to be a corporation - the reason for being a corporation or LLC or other corporate entity is to minimize your taxes.
    Whether you need a business license is up to the laws in your city or state - that's something different than paying federal taxes.
     
  3. daveslaine

    daveslaine Newbie

    Joined:
    Aug 24, 2010
    Messages:
    47
    Likes Received:
    22
    Im in california, and ive heard about delaware corp... But im
    thinking LLC. Which one is better??

    And does it require a physical office??
     
  4. LakeForest

    LakeForest Supreme Member

    Joined:
    Nov 11, 2009
    Messages:
    1,270
    Likes Received:
    1,805
    Location:
    Location Location
    No one will be pissed if you make a ton of money and don't form a corporation.

    Are you concerned about explaining where the money comes from?
     
  5. reallife

    reallife Jr. VIP Jr. VIP

    Joined:
    Apr 2, 2010
    Messages:
    2,676
    Likes Received:
    603
    It really depends completely on what you're trying to accomplish. If you're making a few bucks, spend a few and talk to an accountant. It'll do you a lot better than trying to "guess" when you don't have information to base the guess on.
    No, it doesn't require a physical office, but again, your city may require that you get a license to conduct business from your home if you want to be completely "legal." I'm in California too, and I have a business license that lets me conduct business from my home. It's cheap (can't remember if it's $25 or $100).
    (I actually didn't have a California business license for ten years, I only had Nevada business licenses for my Corp/LLC, so it's not a big deal unless your neighbors report you for running a business from your house. I got it because I needed a business license in order to get something else I wanted to get ;)
    But talk to an accountant. It'll be money well spent - I saved a TON of money on taxes when I got the right corporate structure.
     
  6. daveslaine

    daveslaine Newbie

    Joined:
    Aug 24, 2010
    Messages:
    47
    Likes Received:
    22
    I also wanted to ask, what kind of bank accounts do corporations use to have their money come in?

    Should I get a special bank account for the money to roll in or use my personal bank account?
     
  7. chris1025

    chris1025 Regular Member

    Joined:
    Jul 29, 2011
    Messages:
    221
    Likes Received:
    92
    Having a corp means, making your business a totally new entity separated from your personality, its a totally new person. so name your bank account as your company names,
     
  8. b1step-ahead

    b1step-ahead Senior Member

    Joined:
    Nov 15, 2010
    Messages:
    1,130
    Likes Received:
    506
    Your best bet is to open a business checking account. To keep it simply, just get a ficticous business statement filed by your local county recorder. Take that paper work to the bank and open a account. You may want to be a LLC, it has many benefits.

    -Paypal used to not submit income statements to the irs, or the irs could not ivestiage paypal since its a credit card and not real bank account, thats what I heard anyway.
    I think now if you reach over 20k in a year they will alert the irs.
    -Once bank transactions start to reach 10k or more per transaction, the bank will notify the irs. Open a bank account up and learn to hide your money, remember you can have a ton of deductions if you do it right.