Business license / Tax question

[Truck]

Last year my web site did not make enough to claim on my taxes this year it looks like I am going to make several thousands of dollars. Do I need a business license for tax reasons?

[Nick_W]

Might depend where in the world you are... but most places support a 'single person company' type affair.

Contact the local chamber of commerce or something and they'll tell you what the score is.

Nick

[rcjordan]

In the US, I'd report income of a "few thousand" as personal income for state and federal under my SS#. At some point, say $10k/year as a somewhat arbitrary amount, I'd consider incorporating -not only for tax issues, but for liability protection. I used an LLC, mainly because they are simple to set up and compliance issues are minimal. But if the online business is likely to consistently return MORE than a reasonable salary, the better move seems to be to opt for an s-corp. With proper guidance from your accountant, you can minimize the self-employment tax (15%) on the income not paid out as a salary. So, if this is developing into a serious business for you, it's worthwhile to plan for it now. Changing from an LLC to an s-corp, for example, is messy.

As for business licenses, all that I know are "local" -usually the city, or county, or both. Most are geared for brick and mortar establishments, though I'm sure some locales are now licensing online businesses (when they can find them).

Standard disclaimer: Thankfully, I'm neither an accountant nor a lawyer.