johnnyWebAffiliate
February 9th, 2007, 06:26 PM
or do I get a 1099 from the network? Thanks.
Do I need a business license?
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Herb Ô¿Ô¬
February 9th, 2007, 07:13 PM
a business license requirement would come from your own municipality. most don't need one.
a 1099 comes from collecting $600 or over from a merchant.
neither is related to the other.
a 1099 comes from collecting $600 or over from a merchant.
neither is related to the other.
EmDub
February 9th, 2007, 07:57 PM
What Herb said. Regarding the business license, call your city/town/whatever. They're the ones that regulate businesses. Prices will vary based on your city, too.
Where I live, a business license is required, but I know it's not in a lot of places.
Michael
Where I live, a business license is required, but I know it's not in a lot of places.
Michael
Herb Ô¿Ô¬
February 9th, 2007, 08:11 PM
What Herb said. Regarding the business license, call your city/town/whatever. They're the ones that regulate businesses. Prices will vary based on your city, too.
Where I live, a business license is required, but I know it's not in a lot of places.
Michael
If you feel you must ask, bear in mind that you are not conducting a physical business where you are. Yes, some localities still want to make something from it, but only some cities go to the bother of comparing notes with the IRS or state tax departments.
Don't go crazy asking for paperwork when you don't have to. If you know you are making money, talk to a local accountant first.
Where I live, a business license is required, but I know it's not in a lot of places.
Michael
If you feel you must ask, bear in mind that you are not conducting a physical business where you are. Yes, some localities still want to make something from it, but only some cities go to the bother of comparing notes with the IRS or state tax departments.
Don't go crazy asking for paperwork when you don't have to. If you know you are making money, talk to a local accountant first.
Alan Hamilton
February 9th, 2007, 10:02 PM
Herb makes an excellent point here. Having been in government for many years, my best advice is rather than calling your local municipality and asking "do I need a business license" Go online or go to your local municipal office and get a copy of their guidelines / regulations etc. If you are a merchant, and if YOU sell to local residents, you may need a sales tax id number. If you are an affiliate, I have yet to see a municipality, county or state in which you really need a "business" license, although if you call and ask you will certainly hear differently - from phone workers who don't know what they are talking about.
I can pretty much guarantee you that if you "call" and ask a city / county / state phone employee "if" you need a business license, s/he will automatically tell you that you do. That is nonsense.
You do not operate a walk in business. You do not operate a service business for locals. You do not maintain an office or warehouse with employees. You do not sell tangible products to local residents and YOU are not the one who processes the sales, so in all of these instances, you are NOT required to have a business license. You operate web sites from your computer. Typical govt employees do not understand the nitty gritties of what you do, and how you do it - so they will almost ALWAYS respond "oh yes, you need a business license" - even though in almost EVERY case you do not.
The key here is to actually DO the research yourself. Get a copy of the local ordinances and read them. If you do, you will almost always see that (if your are an affiliate marketer) you do NOT need a business license. The moral here? Search, read and become informed.
Best of Success!
Alan
I can pretty much guarantee you that if you "call" and ask a city / county / state phone employee "if" you need a business license, s/he will automatically tell you that you do. That is nonsense.
You do not operate a walk in business. You do not operate a service business for locals. You do not maintain an office or warehouse with employees. You do not sell tangible products to local residents and YOU are not the one who processes the sales, so in all of these instances, you are NOT required to have a business license. You operate web sites from your computer. Typical govt employees do not understand the nitty gritties of what you do, and how you do it - so they will almost ALWAYS respond "oh yes, you need a business license" - even though in almost EVERY case you do not.
The key here is to actually DO the research yourself. Get a copy of the local ordinances and read them. If you do, you will almost always see that (if your are an affiliate marketer) you do NOT need a business license. The moral here? Search, read and become informed.
Best of Success!
Alan
johnnyWebAffiliate
February 9th, 2007, 10:49 PM
I don't see why I need a business license if the network would 1099 me. I thought 1099 meant that I was an employee of sorts.
AffiliateHound
February 9th, 2007, 10:54 PM
JohnnyWebAffiliate,
Take a look at Box 7 on any of your 1099s. That is where the sender fills in your income amount. It says "Non-employee compensation".
W-2s are for employees, 1099s are for non-employees
Take a look at Box 7 on any of your 1099s. That is where the sender fills in your income amount. It says "Non-employee compensation".
W-2s are for employees, 1099s are for non-employees
Herb Ô¿Ô¬
February 9th, 2007, 11:00 PM
I don't see why I need a business license if the network would 1099 me. I thought 1099 meant that I was an employee of sorts.
a 1099 means that the merchant sent the government a required form reporting your income. You are not an employee, but an independent contractor unless your agreement with the merchant states otherwise.
employees get W-2s, and have taxes withheld from their pay. They also have bosses, which we don't.
now, in Los Angeles you may need some form of licensing, so I hear.
a 1099 means that the merchant sent the government a required form reporting your income. You are not an employee, but an independent contractor unless your agreement with the merchant states otherwise.
employees get W-2s, and have taxes withheld from their pay. They also have bosses, which we don't.
now, in Los Angeles you may need some form of licensing, so I hear.
Witzer
February 10th, 2007, 12:28 AM
I don't see why I need a business license if the network would 1099 me. I thought 1099 meant that I was an employee of sorts.
A 1099 has absolutely nothing to do with a business license.
A business license is a deal between you and your local government allowing you to do business in their domain.
A 1099 is issued to all non-corporate entities....ie individuals ...who have earned 600 dollars or more and have not been subject to state and federal with holding taxes. If you become an employee then your employeer is required to deduct federal and state , income taxes, social security and medicare taxes and issue a W2 form..........
I would suggest that you forget the business license. As long as you are working part time and low profile, there is little chance that any fuss will be made. If some local official calls you on the business license, the worst that can happen is that you pay for past licenses, probably 2 to 5 years and all is forgiven. Any business license that may be required is min fee..........10 to 100 dollars, depending on your location.
A 1099 has absolutely nothing to do with a business license.
A business license is a deal between you and your local government allowing you to do business in their domain.
A 1099 is issued to all non-corporate entities....ie individuals ...who have earned 600 dollars or more and have not been subject to state and federal with holding taxes. If you become an employee then your employeer is required to deduct federal and state , income taxes, social security and medicare taxes and issue a W2 form..........
I would suggest that you forget the business license. As long as you are working part time and low profile, there is little chance that any fuss will be made. If some local official calls you on the business license, the worst that can happen is that you pay for past licenses, probably 2 to 5 years and all is forgiven. Any business license that may be required is min fee..........10 to 100 dollars, depending on your location.
Alan Hamilton
February 10th, 2007, 07:56 AM
Actually, 1099 "contractor" payments have nothing to do with whether it is an individual or a corporation receiving payment. Corporations receive 1099 payments too regardless of whether it is a sole proprietor, partnership, LLC, S-corp, privately held or publicly traded corporation etc etc. But the question here is whether a business license is required if you are an affiliate marketer and the answer is almost always "no". :o
MichaelColey
February 10th, 2007, 09:22 AM
Alan, generally corporations aren't supposed to receive 1099s (although some companies may send 1099s to corporations in error).
From the instructions on the 1099 form (http://www.irs.gov/pub/irs-pdf/i1099msc.pdf):
Exceptions. Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include:
• Generally, payments to a corporation; but see Reportable payments to corporations on page MISC-2;
...
Reportable payments to corporations. The following payments made to corporations generally must be reported on Form 1099-MISC.
• Medical and health care payments reported in box 6.
• Fish purchases for cash reported in box 7.
• Attorneys’ fees reported in box 7.
• Gross proceeds paid to an attorney reported in box 14.
• Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.
• Payments by a federal executive agency for services (vendors) reported in box 7.
From the instructions on the 1099 form (http://www.irs.gov/pub/irs-pdf/i1099msc.pdf):
Exceptions. Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include:
• Generally, payments to a corporation; but see Reportable payments to corporations on page MISC-2;
...
Reportable payments to corporations. The following payments made to corporations generally must be reported on Form 1099-MISC.
• Medical and health care payments reported in box 6.
• Fish purchases for cash reported in box 7.
• Attorneys’ fees reported in box 7.
• Gross proceeds paid to an attorney reported in box 14.
• Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.
• Payments by a federal executive agency for services (vendors) reported in box 7.
Alan Hamilton
February 10th, 2007, 02:38 PM
Yes, I hear ya Michael. Our accountant advised us of this also. My reference was aimed at clarifying the comment that ONLY individuals get 1099's. A payor is NOT restricted from sending 1099's to corporations, however they are not required to do so (in general) with the exception of the points in the code that you capably point out.
However, back on topic of the thread, a business license through a local municipality is rarely needed by an affiliate marketer, so Id recommend avoiding unnecessary paperwork and ongoing reports etc that come with such licensing.
Best - Alan
However, back on topic of the thread, a business license through a local municipality is rarely needed by an affiliate marketer, so Id recommend avoiding unnecessary paperwork and ongoing reports etc that come with such licensing.
Best - Alan
Donuts
February 10th, 2007, 05:24 PM
get your local biz license and check with your state as well, many require filing "doing business as" (dba) records and occupational licenses where required (even if you're a sole proprietor and not an llc, inc or otherwise). legitimizing your business is the professional thing to do and in some cases will provide you with certain legal rights and protections. it is possible for the irs to classify website construction as a hobby and to disallow certain deductions you're entitled to as a business - skip the licensing and you can expect to loose on tax issues. for copyright issues in federal court, if you've filed a dmca complaint against somebody for ripping you off, you can't show business losses if you're not a business and you're not a legal business in virtually all municipalities if you haven't registered. many small claims cases where events may involve business debts for or against your business, will be problematic if you're unlicensed. part of municipal licensing also is a certification process where you're basically registering that you do not process waste or other materials and this process can keep your home from being subjected to hazardous waste rules and covenents. their are also signage and parking requirements that are required in virtually all municipalities - register and there's no problems - skip it, have a butt head neightbor and he can reigister a complaint with the city that you're creating a traffic problem by illegally operating an unregistered biz out of your home - register and you can counter sue for frivilous lawsuits - if you skipped it, many lawyers will tell you to pay the fines levied and suck it up.
and i gotta tell you, it feels good to register your business and to obtain a license. it's cheap (mine is $75 a year i think), renewal is easy (they mail it to me and i mail a check back once a year) and some things (landlord / leases if you have an outside office other than your home, banks where you may apply for loans, credit applications, buying certain services from other companies) are easier to get approved for when you're licensed.
it's up to each person of course, but owning and building my own business is a great source of pride for me - having it legally registered and licensed is a small part of that pride, it's a legitimacy issue i suppose for me - you go from hobby like status to serious business person. it is just a small piece of paper, but what it represents is that you've decided you're in this to make it your chosen profession, you're not just dabbling and playing.
ps, i am not a lawyer.
and i gotta tell you, it feels good to register your business and to obtain a license. it's cheap (mine is $75 a year i think), renewal is easy (they mail it to me and i mail a check back once a year) and some things (landlord / leases if you have an outside office other than your home, banks where you may apply for loans, credit applications, buying certain services from other companies) are easier to get approved for when you're licensed.
it's up to each person of course, but owning and building my own business is a great source of pride for me - having it legally registered and licensed is a small part of that pride, it's a legitimacy issue i suppose for me - you go from hobby like status to serious business person. it is just a small piece of paper, but what it represents is that you've decided you're in this to make it your chosen profession, you're not just dabbling and playing.
ps, i am not a lawyer.
AffiliateHound
February 10th, 2007, 06:40 PM
This thread has discussed three totally separate documents and has probably caused a lot of confusion. I am sure many of you veterans (especially those of you who have posted here) have dealt with these issues for years, but some other newbies may be confused by all of this.
1099
The 1099 is an IRS form whereby an individual or business reports to the IRS all payments made to any non-employee that total $600.00 during the calendar year. They must be sent to individuals, partnerships, and in some instances, to corporations (depending on what the payments were for, as MichaelColey has described), who have received $600.00 in payments. This differs from the IRS form W-2 that is sent to employees. Employees are only individuals, and they will have had payroll deductions made, which are also reflected on the W-2.
Business License
A business license is what Donuts has described. It is issued by a local government. That would be issued by the city where your business is located, or if located in an unincorporated area, the County government. Some business license fees are a modest flat fee, but some are a percentage of gross receipts. This can be extremely costly for some businesses, such as a B & M retail outlet where gross sales are subject to the license fee without any inventory or other business expense deductions. While it would probably not be required for affiliate marketing by most municipalities, some require it of EVERY business in their jurisdiction, and it does afford the protections described by Donuts.
Fictitious Name Statement
This is issued by the County government through the County Clerk's office. This is EXTREMELY IMPORTANT for affiliate marketers to have, for a couple of reasons:
1)This protects your ownership of your business name(s). You should have a FNS for any umbrella business names you use and for every website name. Yes, I know that your domain name registration protects you against anyone else using that name on another website, but without a FNS someone else can use that name for other business purposes, and could conceivably have the legal right to that use it if you did not first obtain a FNS yourself. Also, if you should have any re-registration problems with your domain name, such as is described here: http://forum.abestweb.com/showthread.php?t=31977&highlight=expired+domains, the FNS is protection against others using that name.
2) If you signup with any program, such as Adsense, or even CJ, LS, etc. under a domain name or other business name, and they pay you with checks payable to that business name or domain name, you will need a bank account in that name, and no bank will open an account in a business name unless:
a) the business is a valid Corporation that has complied with all state Corporation regulations, or
b) if it is an unincorporated business, whether operated by a single individual or two or more as a partnership, without a Fictitious Name Statement. If you have many business and/or domain names, most banks will let you have several such names on one business account.
I hope this is information is helpful.
1099
The 1099 is an IRS form whereby an individual or business reports to the IRS all payments made to any non-employee that total $600.00 during the calendar year. They must be sent to individuals, partnerships, and in some instances, to corporations (depending on what the payments were for, as MichaelColey has described), who have received $600.00 in payments. This differs from the IRS form W-2 that is sent to employees. Employees are only individuals, and they will have had payroll deductions made, which are also reflected on the W-2.
Business License
A business license is what Donuts has described. It is issued by a local government. That would be issued by the city where your business is located, or if located in an unincorporated area, the County government. Some business license fees are a modest flat fee, but some are a percentage of gross receipts. This can be extremely costly for some businesses, such as a B & M retail outlet where gross sales are subject to the license fee without any inventory or other business expense deductions. While it would probably not be required for affiliate marketing by most municipalities, some require it of EVERY business in their jurisdiction, and it does afford the protections described by Donuts.
Fictitious Name Statement
This is issued by the County government through the County Clerk's office. This is EXTREMELY IMPORTANT for affiliate marketers to have, for a couple of reasons:
1)This protects your ownership of your business name(s). You should have a FNS for any umbrella business names you use and for every website name. Yes, I know that your domain name registration protects you against anyone else using that name on another website, but without a FNS someone else can use that name for other business purposes, and could conceivably have the legal right to that use it if you did not first obtain a FNS yourself. Also, if you should have any re-registration problems with your domain name, such as is described here: http://forum.abestweb.com/showthread.php?t=31977&highlight=expired+domains, the FNS is protection against others using that name.
2) If you signup with any program, such as Adsense, or even CJ, LS, etc. under a domain name or other business name, and they pay you with checks payable to that business name or domain name, you will need a bank account in that name, and no bank will open an account in a business name unless:
a) the business is a valid Corporation that has complied with all state Corporation regulations, or
b) if it is an unincorporated business, whether operated by a single individual or two or more as a partnership, without a Fictitious Name Statement. If you have many business and/or domain names, most banks will let you have several such names on one business account.
I hope this is information is helpful.
Rexanne
February 10th, 2007, 06:43 PM
Yes, your info was helpful, Affiliatehound. Thank you!
Trust
February 10th, 2007, 06:47 PM
I figure if you're running a business you would need a business license, especially if you do this full time. I would contact an accountant who knows the laws wherever you live it. I got one when I first started and I think it's less than 50 bucks a year where I'm at, have to check. So it's not a big deal.
Alan Hamilton
February 10th, 2007, 09:21 PM
Thanks for the further input gang - good thread.
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