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Starting a small online business? need tax id?


I am employed but hope to start something on the side. I would like to sell ad space or use adsense. the website does not generate any income, but if it does with time, should I incorporate the website anyway (at this time or in the future)? (LLC). how much does it cost? my only concern is tax advantage. If i don't incorporate will all my earnings (from a job and ad income) be taxed at a higher rate? what's a good strategy? thanks!

To make it simple and headache free, first register your business name in your city/county. If it is proprietorship business, and you don't employ any one, then you do not need tax id. You can use your social security number.

Launch your website. Open a bank account for your business. This way you can easily keep business expenses and income separate from your personal expenses and income.

Then with your form 1040 you will need to include schedule C. If you have income it will be added to your all other incomes and you will pay tax on the total income. Evidently, the extra income from your business will fall in your highest tax rate bracket.

In the beginning it may not be wise to go for incorporation, as it involves a lot of headache and compliance problems.

Once your business is established, then you can always go for incorporation.
Incorporating or setting up a LLC would keep your business separate from your personal money. I prefer the Sub S corporation. You are not double taxed on any income, yet have the same protections as in a C-Corporation. States can vary on fees to incorporate. In my state it costs $100. There is also an annual fee of $100 to maintain the corporate structure. You could have to pay on any corporate property owned by the corporation. However, there are a number of tax benefits to using a corporate structure. If you have everything in your personal name and your income is higher then you could pay more taxes on personal income. I don't see a need to incorporate unless you expect to earn a profit or need to keep everything separate.
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