Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
Thank you for your question. If you are in the United States, you can operate your website and not have to worry about taxes abroad. This will change, of course, if you physically locate your operation in another country. For sake of simplicity, I would keep your servers and your operation in the US
I would suggest an LLC
over a corporation. For your purposes, if you are the only member of the LLC you will fill out schedule C
of your tax return
just as if you had no business structure.
If you want a corporate structure, I would suggest an S-corporation. The S-Corporation is also a pass through entity in that you pay tax on your 1040, but you will also fill out an 1120S for the company to calculate what needs to be taxed on your return. With the S-Corporation you will have to pay yourself a "reasonable salary" and pay employment taxes on that salary. On Schedule C (for the LLC) you will pay self employment taxes on your entire profit. So, if your profits are substantial the S-Corp will offer you some relief on self employment taxes.
To be an S-corp, you would incorporate then elect S-status with the IRS
. CLICK HERE
for the form
to do that. Keep in mind that only US persons can be members of an S-corp. If you ever took on non-US shareholders
, you would lose S status and would be a regular C-Corp.
I would incorporate in the state that you live in, or Delaware. Delaware is a very popular state and there's no state income
tax for businesses so you would only have to worry about your portion of New Jersey taxes (you will have to pay tax on your salary and dividends
in New Jersey). CLICK HERE
to read about incorporating in Delaware.
Please let me know if any of this is unclear, or if you require further clarifications. Thanks again for using JustAnswer.com
** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**