Hi everyone, I was planning on writing, recording, and selling downloadable items on the Internet under a fictitous name. For example: My plan is to set up a website as this "fictitious name", then have customers make out all checks, credit cards, money orders, paypal payments or whatever to me as "fictitious name". QUESTIONS: 1. In order to try to protect my real identity and to possibly open up a bank account and be able to accept these payments, is it advisable that I open up a merchant bank account or can I open up an account as "fictitious name" without it having to be a merchant account? 2. I've heard that if the business DOES NOT generate a lot of income (less than 2/3rds of my total income), that it may not be necessary to for me to get a business license to do this. Is this true? 3. If the business DOES generate a lot of income, are there any considerable tax advantages to be gained by setting up as a business (possibly an LLC) as opposed to just listing it in my taxes as extra income? By the way, if it helps, here's a brief financial overview of me: Currently, I am not a homeowner, nor do I own any other substantial property at this time. My status is single, with no children, with no debt, and I'm renting an apartment. My yearly income from my day job is around $44,000. Thanks in advance for whatever info any of you may want to share. VU365
If by "fictitious name" you mean "business name" then you will need at least to set up a business and open a business account at your bank otherwise you will not be able to cash checks or money orders. If you open a merchant account as well you will still need a payment gateway to process the payment (like Authorize or other) without a merchant account you will need a third party payment processor (like Paypal or other) As for taxes and licenses you will have to consult with your local authorities as these depend on the laws of your country.
I will assume you are based in the US. It's going to depend on your city, county and/or state. As far as tax advantages go, talk with your accountant/cpa. most likely yes there will be advantages.
I recommend an LLC. It's not really a fictitious name, it's entirely a separate entity and so long as you are the only employee/owner you can file under your personal taxes. There's no such thing. You cannot fully protect your real identity and in many ways this is a good thing. There was a time where this was possible to not today, not in this transparent business world and internet. You cannot open a merchant account without a DBA or a filed business name with you listed. So the process is: 1. File a business name. LLC protects your personal assets not your identity. It acts as a buffer. 2. You will get what's called an EIN Number. This is your business name's Social Security or Tax number. 3. Take this document or documents into your bank and create a business bank account. 4. Sign up with paypal business or another online merchant account under your business name. 5. Start doing business and check with your accountant about the thresholds of when you have to start filing your LLC separately or quarterly. What you hear is not always correct. LLC advantage is the ability to be taxed as a subchapter 'S' corp which has bennefits. So the answer is YES. Please find more information here: http://www.sba.gov/smallbusinessplanner/start/chooseastructure/START_FORMS_OWNERSHIP.html
Hello VU365, There is a technical answer and a practical one. Here's the technical answer. In many if not most states, while you do not need to file for a sales tax license or file as a business entity right away, they do require that at a minimum you apply for what many states call a DBA or doing business as name. Anyone who is doing business under a name other than their given one technically needs to file for this certificate. Now, from a practical perspective, you can actually set up your vehicle for selling your content (website, storefront, etc. ) and collect payment with out registering a DBA, getting a business license or even a merchant account. The fact until you begin to generate income large enough to have to be reported, you'll be ok not filing for anything yet. There are several payment processors specifically set up for digital content providers, they'll let you set up an account for free or for a very small amount of money (like 5 bucks a month) and they don't require a license or certificate of any kind. Many of them serve as both your payment gateway and your merchant account. Which means you don't need to do anything except set up your account and upload your content. They literally, transmit the content to your customers for you upon confirmation of payment. They have weekly, bi weekly or monthly payouts and will send you your money through either an ach transfer, bank wire or even mail you a check. There are others that serve as only a gateway and will transfer your payment to you immediately via your existing third party payment processor (paypal for example) or merchant account. Now as far as filing as a business entity, if you begin to generate the size of income that would require you to report it, then you should register as some sort of business entity (sole proprietorship, partnership or a corp.) Among other things it will help you to receive tax credits and give you tax write off's. As well as, in the case of corps and partnerships, minimize your tax liability and your tax burdens. As far as the type of entity to form, that's really determined by the kind or more to the point, size of business you have. For an individual with a business and no partners or employees, an LLC is probably the best choice. So, in short, I would recommend you start your business first, register with a content payment possessor and see how it goes. If you see that you are generating a sizable profit, register for your DBA and look into filing as an LLC. I hope that shed some light on the subject and I wish you lots of luck in your new endeavor. Regards
Thanks everyone for all the responses that you've given me. I'll look into getting a business license and then filing for an LLC. I've been looking into going through LegalZoom to get my LLC. But I'll also be checking out the SBA linkthat TLDagent provided too. Here's another quick question: It's been suggested that I may want to categorize myself as an "information seller" or something similar when I apply for a business license. Is there a place online somewhere----maybe some website that shows the different categories of businesses? Remember: What I'll be doing primarily is writing, recording, and selling downloadable items on the Internet under a fictitous name. I will be promoting my products via weekly "how-to" advice-styled podcasts that would direct people to my website for more information. I currently have a pretty good sized following on a relationship advice forum and my plan is to parlay that audience into a group of potential customers for my self-help products. So, in order to pick the most appropriate business license category for me, is there a place online that i could research to pick the best category for what I'm trying to do? So far, I plan on checking out the SBA and my state's business websites to see if I can find something... Thanks again. VU365
Don't get too caught up in the minutia of business category. Just point and shoot. Businesses change all the time so it's no big deal. The only thing that matters is that you're paying taxes, outside of that all businesses evolve. Just for something to look at, here's a good link: http://www.census.gov/naics/2007/NAICO607.HTM You can also search the: http://www.osha.gov/pls/imis/sicsearch.html Neither of these make no difference though in your situation. You'll need one of these eventually: https://sa2.www4.irs.gov/modiein/individual/index.jsp
Hey tldagent, Thanks for this added info. I've been looking at some of it already, and I plan on looking at all over more in-depth this weekend. Everyone's responses have really been helpful------and the most important thing is that it's inspiring me to really get off my butt and get this done. This is actually the second business I'll be starting. I started a traditional comic book publishing business back in the 90's just before that industry collapsed. I plan on being a lot smarter with my strategies and forecasts this time around with this information selling-typed business. Thanks everybody! VU365d
Hi , I'm a Chinese . I don't know how to handle in UK. but in China many web and people do this without licences. Also so many foreigner have office in China without licences . but they also can do their export and import business. Because you can find a freight forwarder who can do all the thing for you in lower pay. If in China need some asisit can contact me os-sara@caihuisz.com/ MSN: sara0921@live.cn