Do I need a Limited Liability Company (LLC) for my affiliate marketing business?
I am starting an affiliate marketing business, and have been informed that I should open an LLC to protect myself. Is this wise, how do I go about doing it, and if i’m running it all online from home, do I need a business license? If I have an LLC, can I just open a small business account with Wells Fargo for it?
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If you want to help seperate your personal life and monies from your business. You will need it for the bank account. You can get it through your states website for free. (There is a fee to start it and renew it). Best to talk to a accountant, as there is a better way at lease in my state to avoid taxs (I should say not to be taxed as much and more fairly). Busienss license depends on your government. Cities may require them.
You do not *need* to form an LLC to start an affiliate business. Most affiliate marketing businesses are low risk, especially when starting out, so you’ll likely be fine starting with a sole proprietorship to save on start up costs to get your business going. Then once you start making some money, talk to an account to see which business structure is best for you and you’re situation.
Even with a sole proprietorship you’ll want to keep clean and accurate financial records. Opening a separate bank account and using a separate credit card for business activity is usually the best option for this purpose.
No, you don’t need an LLC, but I would probably recommend it. For tax purposes, you will put your LLC earnings on a Schedule C just like you would if you used your own SSN for the business without making it an LLC. Unless you have partners, there are no other annual filings required.
It’s easy and relatively inexpensive to file with your state ($125 in Ohio, similar in other states) and the IRS (free), and it will help you keep your personal and business finances separate for tax purposes and legal liability.
An LLC won’t give you complete protection, though–your personal assets will still be somewhat at risk. Generally, an S-Corp or C-Corp would provide you with more protection, but they take a lot more paperwork. Consult an attorney for more info.
You probably don’t need too much protection–I agree an affiliate marketing business (acting as an affiliate, collecting commissions) is pretty low risk. But again, an LLC is easy.
You don’t need to form an LLC to open a business checking account–you can open a business account using your SSN, and it will be separate from your personal accounts. I bank at Chase, and they’ve done this for me in the past.
Here’s the process for an LLC filing:
You should do the filings yourself–you don’t need Legal Zoom or another service.
Here’s the process. It’s really not that complicated:
1. Find your state’s “secretary of state” website, and download the forms for registering a business. You’ll need to decide what business structure you want to use–I would probably recommend an LLC if you’re the only one running the business, but a C-Corporation is a good option if you’re planning to have lots of investors or go public. In Ohio (my state) it only costs $125 to process your business filing, and it’s a simple 2-page form for an LLC.
2. Once your state paperwork is approved, you can register with the IRS for an Employer Identification Number (EIN). You need this even if you aren’t going to have employees:
http://www.irs.gov/businesses/small/article/0,,id=97860,00.html
3. Open a business checking account. They will probably require your EIN from step 2.
That’s it. Of course, it’s helpful to consult an attorney to make sure you’ve covered all of your bases.