How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 10359
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Type Your Finance Question Here...
Megan C is online now
A new question is answered every 9 seconds

I operate a business online, through a variety of forums, where

Resolved Question:

I operate a business online, through a variety of forums, where I sell Letters to people, in order to get them "unbanned" from video games they play. Through this, I have netted an income over over $17,000, from a variety of countries, in about 4-5 months. I am wondering if I need to setup an LLC, or obtain an EIN number, or anything else in order to prepare myself for taxes. Paypal stated that it gives you year end documents for taxes, but I also want to make sure I am protected, and that I can protect my business for the future.

Again, this is all done over the internet, and I don't have an actual website. I communicate with people through forums, and email. Customer pay through paypal, or giftcards for websites such as amazon, and I submit letters to them via email. I was hoping you could guide me in the right direction to know if I am in compliance with the law, or if I need to change something moving forward.
Submitted: 5 months ago.
Category: Finance
Expert:  Megan C replied 5 months ago.

Megan C :

Hello. Thanks for your question. My name is XXXXX XXXXX X will be happy to assist you today

Megan C :

You don't have to set up an LLC or get an EIN. That's not required to be in compliance with laws

Megan C :

An EIN is only absolutely necessary if you have employees that you are paying. No employees, means it's not REQUIRED to get an EIN

Megan C :

You could set up an LLC if you wanted a more professional appearance. If you did this, your tax return would still be the same as if you did not have an LLC because the IRS disregards XXXXX XXXXX So, your income would still be on schedule C

Megan C :

If you set up an LLC the only way you would need an EIN is if your bank required one for your account. You would not do any of your tax filings under the EIN, it would still be done under your social security number.

Megan C :

But, there's no need to set anything up to be in compliance. You can keep doing what you're doing and be okay

Customer:

In regard to the taxes, would I just get the generated documents from paypal and submit them at the end of the year? I just wasn't sure if this is something I needed to be doing weekly, or if I could just save up the money, and pay off the taxable income when tax period comes around.

Megan C :

During your first year, you can pay the tax at the end of the year in total with no penalty. After that, you need to make quarterly estimated payments

Megan C :

You do this through filing form 1040-ES

Megan C :

A rough estimate would be you take your tax liability from the prior year and divide it by 4. Send in 1/4 at the end of each quarter using form 1040-ES

Customer:

Sorry for the questions, I just was concerned about a few things as I had never embarked on my own business before.

As I had stated, this all operates online, through a variety of forums, and I send customers the "letters" they request, via email. I don't know how often I will be doing this, and it really all depends on supply and demand. If this business would only be until half way of next year, would I still have to send the payments throughout the 4 quarters, and be refunded, or would I just stop, when I stop the business.

Customer:

I know paypal stated somewhere that they compile all your debits, and credits, and compiles a document for you at the end of the year, so I figured I would have to deal with that while filing my taxes, and provide that to the people whom are doing my taxes. I just wanted to make sure everything else I needed to prepare would be situated, such as the 1040-es you mentioned above.

Megan C :

You could stop the estimated payments if you stopped your business, because you would not be incurring a tax

Megan C :

And yes, PayPal will provide you with year end documents and you could provide that to your tax return preparer.

Customer:

Ok, so basically, I don't truly need an LLC, but I could do that to help protect myself, if I should ever be sued for whatever reason. And I would just be able to do my taxes as normal.

Megan C :

Yes, that is correct. That's really the only reason you would need an LLC

Megan C :

It's not required for tax purposes

Customer:

I really appreciate your time, and you answering the questions I had. I am in a more comfortable place now.

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 10359
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 4 other Finance Specialists are ready to help you
Expert:  Megan C replied 5 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Customer: replied 5 months ago.

Thank you for your time!

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1885
    More than 5000 online tutoring sessions.
< Last | Next >
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1885
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    1853
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 8
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    CPA, CMA, CFE

    Satisfied Customers:

    1051
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    836
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    394
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    313
    NASD Licensed Rep, 1997-2001, Business Attorney