is a directory considered a small business?

Discussion in 'Directories' started by leirza, May 31, 2011.

  1. #1
    I am just trying to learn more about making directories...and from everything I have been reading the past few days, it seems like everyone says the same thing: get a script, set it up on your domain, and go. But I can't find the answer to my question: Is running a directory or multiple directories considered a business? Is it something you have to register as a business and get a tax id for, and then how does everything work come tax time? Or, can you just set up a directory, have the paypal linked to your regular checking account and go? Any feedback on how those of you who actually have directories do this would be great. And what about for membership sites, or portal sites where people pay you for a membership and can list their vacation properties with you?
     
    leirza, May 31, 2011 IP
  2. Mia

    Mia R.I.P. STEVE JOBS

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    #2
    A directory can be a business, sure. Especially if it generates revenue. So you will likely need to incorporate in some capacity to protect yourself, filed taxes and of course obtain a business license.

    Ultimately you should probably consult an accountant or tax attorney if you are unsure.
     
    Mia, May 31, 2011 IP
  3. YMC

    YMC Well-Known Member

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    #3
    Wow Mia, I doubt most directory owners have formally incorporated. Guess it depends if you are working by yourself or have gotten large enough where you need to hire help/employees. The main issue is that you properly report income/losses and pay the appropriate taxes.

    Assuming you live in the US, see if your local community college offers any small business advice or if you have a local SCORE chapter. Your bank might also offer some advice.
     
    YMC, Jun 1, 2011 IP
  4. Vicky from DNP

    Vicky from DNP Peon Affiliate Manager

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    #4
    Of course it can be a business. You have various ways of monetizing it.
    You can take a fee to every submission, you can place banners, etc.
    Just be sure it's a quality directory and not a link farm.
     
    Vicky from DNP, Jun 2, 2011 IP
  5. Mia

    Mia R.I.P. STEVE JOBS

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    #5
    If you live in the US, every municipality requires you have a business license if you are running a business, even if it is in your home or on the internet. They average like $10-$25/yr. Also, it's both inexpensive and easy to incorporate and an important part of running any revenue generating business. It protects you from being sued personally, which can and does happen, and can mitigate your personal liability as well.

    Lastly, in most US States there is a threshold or maximum amount you can earn before you need to file an earnings report and pay taxes. That is usually around $500-$600.

    It's pretty easy to exceed that amount on a monthly basis with a directory alone. Believe me, I know.

    The nice thing about incorporation is you can house multiple entities under that one umbrella. The directory biz is not my main business or source of income. Its just one more little venture in a larger group of companies that all generate revenue and enjoy the protection that incorporation provides.
     
    Mia, Jun 2, 2011 IP
  6. YMC

    YMC Well-Known Member

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    #6
    True incorporation does separate personal liability from the business but that seems like something that someone just starting out wouldn't need to do.

    Not every municipality requires a business license - mine doesn't - I called several local government offices and they all said that I didn't need one. (They did however warn that the neighborhood I live in might have covenants prohibiting running a business from home.)

    The bank told me that the primary reason most sole proprietors get a business license and tax id is when they are manufacturing something and want to pay wholesale prices for raw materials as well as satisfy the requirement to make quarterly earnings reports. I was told that by getting a checking account under a "doing business as" was enough. According to the tax pro that I consulted, all I need to do is file taxes annually and fill out the extra business income/loss forms to pay social security and properly report all of my income. Seems to me that wouldn't be enough but everyone I've talked to says it is - at least where I live and for what I am doing - I run two directories, have several Adsense sites and offer content writing services.

    Make sure that you have a well-thought out and visible terms of service and stick to it. Make sure it includes verbiage that you/your directory are not endorsing the sites listed and that anyone using your directory should do their own due diligence prior to conducting business with any of the sites listed. I figure there's so much case law relating to Google's "no promise/guarantee of inclusion" that precedent is firmly in place for me to decline listings. So, I' not sure, if you are only going to run a directory, what liability risk you would have.
     
    YMC, Jun 2, 2011 IP
  7. sarahk

    sarahk iTamer Staff

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    #7
    Many countries will allow you to operate as a sole trader which means less paperwork. However any earnings need to be declared and expenses (hosting, domain, your own "wages") can be claimed and tax paid on whatever is left.
     
    sarahk, Jun 4, 2011 IP
  8. sambling

    sambling Well-Known Member Affiliate Manager

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    #8
    Sole Trader is a lot cheaper. Unless you're borrowing money or have some other liability that is more than you can usually afford with your income use a sole trader. If your directory becomes big and you buy other directories/ web assets then put it all into a company. You can always create a company later.
     
    sambling, Jun 6, 2011 IP
  9. balexandru1

    balexandru1 Peon

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    #9
    Yes Sole Trader it`s a good solution.
     
    balexandru1, Jun 7, 2011 IP
  10. ClickIn

    ClickIn Greenhorn

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    #10
    In US people call it Sole Proprietorship not Sole Trader.
     
    ClickIn, Jun 15, 2011 IP
  11. sarahk

    sarahk iTamer Staff

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    #11
    Quite likely and the OP is in Germany so I'm expecting their name will be different again. Either way, I think we're all agreed that it is a business.
     
    sarahk, Jun 15, 2011 IP
  12. writershood

    writershood Peon

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    #12
    I think so...I also want to learn this. So any can pm me and help me how do i start this.
     
    writershood, Jun 15, 2011 IP
  13. seoakram

    seoakram Peon

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    #13
    Quite likely and the OP is in Germany so I'm expecting their name will be different again. Either way, I think we're all agreed that it is a business.
     
    seoakram, Jun 15, 2011 IP
  14. wekop

    wekop Peon

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    #14
    I totally agree with the advice of friends, with your taxes to obtain a business license.
     
    wekop, Jun 16, 2011 IP
  15. sambling

    sambling Well-Known Member Affiliate Manager

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    #15
    A lemonade stand is a business so a directory is too.
     
    sambling, Jun 18, 2011 IP