Hey guys - I know I need to get a lawyer and accountant to answer these questions for me in the best possible way, but I'd like to hear your take as well. I have a business (S-Corporation) in Washington State and it has an EIN number. It's completely legit and registered with the IRS, state, and city. The only employee the business has is me. I get paid from the company $0. All the business does is buy websites and put Google Adsense on them (I signed up for an account with them under my business name and EIN). When the business gets paid from Google, it just takes that money and buys more sites to put more ads on. I take $0 from it personally and the business just uses it to grow. So here is my question: Is the income I get from Google still taxable if I am just reinvesting it right away back into the business? Is there any situation here where I do not have to pay taxes on the Google income LEGALLY? Taxes+Hosting really cuts into the amount I have to reinvest according to my numbers, so I am trying to see where I can cut these costs down. Thanks for the simple advice. Ethan
While I can't profess entirely on taxation in the US, you should only be taxed on your gross profit - so thats income minus expenditure. Any money you're putting back into other businesses, hosting etc is expenditure. If all the money you make goes back into your business, then you have no actual profit, therefore nothing to be taxed on. You will, however, have to clarify what counts as expenditure when it comes to tax relief.
You do not pay taxes on the income because you used it to to buy more sites. You basicaly have no income because your not taking payment. You must still file quarterly tax even though you make no money. They fine you $50 and penalties for not filing federal quarterly taxes. Not sure about your state but you should have to file them also.
Thanks guys that is great news for me. When is it considered profit? When I don't spend it within a quarter? Or if I do pay out to any employees? Or what?