Tax time cometh

adsense and taxes--ideas?

[ownerrim]

I posted about this once before. Just curious as to how individuals are handling tax reporting of adsense income.

Anyone set up as an S corp for this, or as a limited partnership, or just using schedule C?

[Nathan]

Just use schedule C. If you setup an S Corp, you'll be taxed twice (unless you have a good accountant).

[JamesR3]

I don't think that is true. An S Corp gives flow-through income, doesn't it? So, you are only taxed personally, just like you would be with a schedule C or an LLC.

I've discussed these issues with some other people at length, and we've gone over them with our acountant. The practical answer is that it depends on how much money you are making and what your exact situation is. If you aren't making much money, the differences will be trivial, and you don't need the extra hassle of dealing with the paperwork that comes with any form of corporation. If you are a UPS member, or close to it, you should consult with an accountant -- you can afford it anyway ;)

Of course, this is only speaking from a tax perspective. If you own a business that has any reasonable chance of getting sued, you need to consider a form of ownership that protects your personal assets.

[sailorjwd]

My accountant says that you save about 15% on profits above 87K with an S-Corp. Also, my lawyer says you can't hide liability behind an S-Corp when you are the only one in it. You need professional liability insurance and a large umbrella policy in case someone trips over the rake in your yard.

[ownerrim]

"Just use schedule C"

What if you have next to zero in expenses?

[coho75]

What if you have next to zero in expenses?

This is not a problem. Having expenses simply decreases the amount you owe.

[ownerrim]

"This is not a problem. Having expenses simply decreases the amount you owe"

Actually, it seems like it is a problem. I have no way of reducing the amount I owe if I have no expenses.

[edited by: ownerrim at 9:11 pm (utc) on Mar. 22, 2005]

[coho75]

If you have a separate home/office, you could count your Internet connection, Mortgage/Rent, or electricity as an expense. As well, you should also be able to count advertising and hosting costs as an expense.

[oddsod]

Anyone setup an offshore company to receive Adsense monies?

[ownerrim]

"If you have a separate home/office, you could count your Internet connection, Mortgage/Rent, or electricity as an expense"

Thought of that, but I've heard that the phrase "home office" throws up an irs red flag.

[elguapo]

You also cannot use the home office tax deduction if doing so will cause your business to show a loss. You can only use the home office tax deduction if you have a positive income. But since you have no expenses and only income, then that would not be a problem :o)

[rfung]

heh. isnt one of the beauties of AM/AS is that you have no expenses beyond PPC/hosting/advertising?:)

take the good with the bad...

[Nathan]

Here are probably most of your expenses:

Domain Name
Hosting
Advertising
Internet Access
Computer
Software
Prozac

Okay... maybe not that last one. ;-)

[annej]

If you have real content site you may have expenses including

books
magazines
symposiums
classes
workshops
travel to do research
materials used to make examples
software needed for your topic (widget designing software)
etc

[varya]

S corporations have pass-through on the income. You declare it on your tax return as personal income, just like a sole proprietorship.

C corporations file their own tax returns. There is a possibility for double taxation...if the corporation pays out dividends. The corporation pays tax on the profits and the shareholder pays tax on the dividends. The corporation does not pay tax on expenses, including salary and bonuses, so if you employ yourself, you'll only pay personal income tax on that money. In some cases, corporate income tax may be lower than personal income tax (it is in my state).