So... what's considered as a business?

[Edesse]

As an anecdote:
I'm thinking about building a small website (a niche site if you like). In all my researching endevors, this site has proven extremely helpful. However, when I stumbled upon the problem of tax, everything started to go downhill from there... So here's my question:

By owning a website and earning income through Ads, are you automaticly considered a "business" by the IRS? If so, will it mean the beginning of the paperwork/tax work nightmare?!

P.S. This is my first post, Hello everyone :banana:

[Chris]

No. If you want to keep it simple you'll just give the ad networks etc your SSN and they'll send you 1099's at the end of the year which you report on schedule C of your person tax return. You also will be able to deduct any business expenses against this income. Definitely seek the help of a professional accountant when the time comes, they're not that expensive and will usually save you more than they cost you.

[Edesse]

Wow, that's definately easier than I thought. Btw, do you mean this Schedule C?

http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

[Chris]

Adobe is fracked up on the PC I'm using, but it probably is.

[KLB]

As Chris eluded to you can run your business as a sole proprietorship which allows you to declare your earnings through your normal tax filing. If you begin to earn a real living from your business then you should start to consider incorporating and filing with the IRS as an "S" corp. This can give you signifacant tax advantages although it also means you should use an accountant to help you keep up with the paperwork. Our accountant figured out that here in Maine it makes economic sense to incorporate if a business generates more than $20,000 a year in profits. Basically at this point the tax savings exceed the extra costs related to paying our accountant to handle things.

[demosfen]

Better check with their website, but I believe IRS doesn't want to have anything to do with you if you make under $400 a year in profit. Since you work from home, subtract your DSL, 25% of your rent, 25% of electric bill, and whatever expenses you can come up with. If you end up with less than $400, don't start worrying about registering sole prop. yet. Otherwise, see if you can come up with more expenses. If it still doesn't bring you below $400, start worrying. Keep a low profile, government can't steal what they can't find. :) (that means be very reluctant to give your SSN to anyone, because that's how IRS tracks you)

[Edesse]

As Chris eluded to you can run your business as a sole proprietorship which allows you to declare your earnings through your normal tax filing. If you begin to earn a real living from your business then you should start to consider incorporating and filing with the IRS as an "S" corp. This can give you signifacant tax advantages although it also means you should use an accountant to help you keep up with the paperwork. Our accountant figured out that here in Maine it makes economic sense to incorporate if a business generates more than $20,000 a year in profits. Basically at this point the tax savings exceed the extra costs related to paying our accountant to handle things.

Oh... So based on this and what Chris said, I should, as a sole proprietor:

Make a website
Put it up (Ha)
Get Ad networks
Who will send me a 1090
I use the 1090 to fill Shedule C (1040)
If my website grows, then I should seek a consultant.

Btw, as a 17 yr old, will I be able to do everything in my name ( such as filling tax forms or getting Ad networks) or will I have to do things in another's name? Say, my brother.

[Chris]

You can do it in your name as long as the ad network doesn't have an issue with it (most do though). There certainly is no age minimum for paying taxes.

Or you could focus for the next year on building content and only worry about monetizing it once you turn 18. Focusing your attentions on growth is probably a better thing right now anyways.

[redfoxtrystman]

i have a website do i need a business license. i offer modding services for many game systems. and some other things do i need to get one? i live in oregon and i don't really charge that much for modding them. i may make $30 or $40 a mo
here take a look and please tell me what you think.
oh also it is a community site we have 7 modders on it so not all the money go's to me.

http://oregonmodding.ash.com/