A friend of mine lives in Florida and he's been asking me about Clickbank and taxes. Clickbank says if he makes $600 or more it's a good idea to get a EIN for tax reporting. He was about to go ahead and do it via the IRS online application, but these are the questions he asked me: 1) Does owning an EIN mean I have a business? If I want a business later (probably an LLC I suppose) can I use my new EIN? 2) Does clickbank take out taxes? Thanks for any help in this regards. - Xohaib
1) - i'm not sure - EIN generally means you are a business i beleive its tied to a corporation status - however, you can use your SSN in place of an EIN Corporation protects your assets, if your corporation gets sued its the corporation entity (not you yourself) that is being sued Sole proprieter is when you just use your own SSN i'm pretty sure - however you have less protection, if you get sued you do not have the protection a corporation would offer you. Tell him to just register a ficticious name if he wants a "business" for now, even that he really doesn't have to do, just put your SSN in on clickbank in place of EIN and pay taxes on the monies made through clickbank - now if he starts raking in some SERIOUS cash he should consider a corporation to limit his liabilitiies and protect his assets 2) No, they do not take out taxes, you are responsible for this.
Clickbank only account for sales tax... not personal income tax. Therefore your net income from clickbank is taxable. I don't know exactly how it works, but if you already have a job and your employer is taking the tax directly, then you will likely need to pay the income tax rate on your clickbank earnings (and maybe even slighly more if it is classed as 2nd job income). The best advice is to check with your local tax office and find out what you need to do... but remember: - you can make deductions as well if you keep receipts and can prove they were made for business use (web hosting fees, domain names, marketing costs etc). This would reduce your taxable income a bit and lower the overall impact... but you need to speak with your local tax office to get all the relevant information applicable to your situation.
I'm 17 and I have an EIN. All you have to do is consult with your accountant and he should fill the paperwork out for you.
Clickbank dont handle any tax issue because they have a worldwide publishers and it will be complicated for them.
I don't believe a EIN means your a business, although it is short for "Employer Identification Number." I'm no expert but it seems as if its just a ID number the government labels you with to become an employer and start employing others.