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  1. #1
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    Exclamation Starting a service like Adsense, what do I need to do/know?

    Hey guys,

    Okay, my ordeal is that I have been pondering about starting up an advertisement service, that of which is similar to Adsense, YPN, Text Link Ads, AzoogleAds, CJ, ect. (but I won't be serving contextual ads, it will be a different way of advertising but advertising non-the-less with clients). However, that is not what I'm asking about.

    My question is, how would I go about setting up a business, that handles the same user information as Adsense. SSN, EIN, W-9 forms, and other personal information. I'm sure I woud have to go and register a business license for this, but I have no other ideas what is involved in starting something in this field. I would have to probably get a lawyer to draft up documents, work with IRS and other forms. And also find ways of encrypting data for transferring over the web like credit card numbers and data of the sort.

    Does anyone know exactly, or partially what is needed for a U.S. resident to start something up like this? I just got this idea today, so I'm starting fresh and would like ANYONES input on this matter, who could be of assistance.

    Thanks guys.

  2. #2
    SitePoint Wizard silver trophy
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    The legal formation of the company will likely be the easy part of this sort of venture. The hard part is getting a working system in place and kick starting it.

    Despite all the complaints, Google and Yahoo both have very powerful fraud detection systems along with entire teams of people to manually review logs and stop any sort of issues that may be detected. Second tier ppc systems have a very hard time convincing potential advertisers of their validity and reliability and as such, it's not easy to get people to advertise.

    Assuming you can build the fraud system, hire the team and get that all sorted out, there's the whole chicken and egg issue to address. In order to get a publisher, you need to have enough advertisers for them to want to join and to insure they can make a reasonable payout. In order to get advertisers, you need publishers with a source of reputable traffic. The smaller the network, the smaller the advertisers and publishers and therefore the less appeal there is on both ends.

    Then you get into all sorts of fun business and technical issues like creating a good bidding system, putting in place a reliable backend infrastructure, issuing publisher payments, collecting client payments, screening for fraud on client payments, screening for fraud on publisher accounts and on and on.

    Simply put there is nothing simple about starting this sort of venture. Just getting the system together for a mass-audience market is hard enough, drawing in a reasonable amount of users can be even harder.

    This is not t say it can't be done; there are several very successful "smaller" ad networks but most of them have had many years to grow and evolve and did so while the internet was quite young and before some of the concerns we have today arose.
    - Ted S

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    The beauty about what I'm drafting up for an advertising network is that click fraud isn't a potential for disaster. The publishers won't be payed based on clicks, but based on an action. An action not based on the publisher's traffic, but based on what the publisher does themselves.

    Thus the need for developing a powerful click fraud system with teams reviewing logs is essentially not needed for this project. Nor do I see the need for a bidding system, or atleast a complicated one, because the advertisement isn't based on keywords and isn't just a simple contextual ad.

    i do agree that I will need to develop a nice formal and informative member section for both publishers and advertisers to allow the most information possible on their campaigns. And the need for issuing payments and the legal restriction behind it I am wanting to find out more about.

    I see advertising networks, such as Text-Link-Ads not requiring members to suppliy their SSN or EIN. However, other advertising networks such as Adsense, YPN, AzzogleAds, ect. wanting their publishers to supply SSN or EIN. What are the terms for needing SSN or EIN in this field of business? I would prefer not to have to handle SSN or EIN because it is very critical information that often turns publishers away from signing up for smaller advertising networks, and aswell puts a heavier legal burden on my hands if I have to handle with SSN or EIN.

    Also, what would be the best way of handling fraud with advertisers credit cards if this is a mean of payment they chose to pay us. I'm guessing calling up the card holders phone number to verify the card would be an alternative to checking fraud with advertisers.

    I couldn't see any fraud problems coming in on the publishers side, if they are recieving payments via check or paypal.

    I also see getting advertisers or publishers to sign up would be the hardest part, but the less risk for publishers signing up if they don't need to input their SSN or EIN for the process. Can I not have them give me this info, or is it illegal for purposes with the IRS? I'd like to keep an advertising network with quality publishers, and that should be a great way to attract advertisers.

    If anyone would have more information, please share. And thankyou Ted for the input so far.

  4. #4
    Non-Member demosfen's Avatar
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    I also see getting advertisers or publishers to sign up would be the hardest part, but the less risk for publishers signing up if they don't need to input their SSN or EIN for the process. Can I not have them give me this info, or is it illegal for purposes with the IRS?
    SSN is not required to earn income in the US. IRS requires that you REQUEST it. The difference between 'request' and 'require' is the difference between 'optional' and 'mandatory'. You have to ask for it, but you can write the word 'optional' near it.
    Some people don't have SSN for religious or liability reasons (like many Amish, from what I read), it wouldn't be fair to deny them

  5. #5
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    Quote Originally Posted by demosfen
    SSN is not required to earn income in the US. IRS requires that you REQUEST it. The difference between 'request' and 'require' is the difference between 'optional' and 'mandatory'. You have to ask for it, but you can write the word 'optional' near it.
    Some people don't have SSN for religious or liability reasons (like many Amish, from what I read), it wouldn't be fair to deny them
    Thanks for the input. This was what I was looking for on that subject, it helps clear a lot about that issue. But I guess it would always be best to run it past a lawyer in the end. Thanks.

    Anyone else have information on this subject?

  6. #6
    Web Developer stickycarrots's Avatar
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    SSN is not required to earn income in the US. IRS requires that you REQUEST it. The difference between 'request' and 'require' is the difference between 'optional' and 'mandatory'. You have to ask for it, but you can write the word 'optional' near it.
    Some people don't have SSN for religious or liability reasons (like many Amish, from what I read), it wouldn't be fair to deny them
    I didn't know that. Thanks!

  7. #7
    Follow Me On Twitter: @djg gold trophysilver trophybronze trophy Dan Grossman's Avatar
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    Quote Originally Posted by Submerge
    However, other advertising networks such as Adsense, YPN, AzzogleAds, ect. wanting their publishers to supply SSN or EIN. What are the terms for needing SSN or EIN in this field of business? I would prefer not to have to handle SSN or EIN because it is very critical information that often turns publishers away from signing up for smaller advertising networks, and aswell puts a heavier legal burden on my hands if I have to handle with SSN or EIN.
    They collect this information because they're required to have it on file and need it to send the 1099 forms to every publisher they paid at least $600 to during the year (and a copy of each 1099 to the IRS).

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    Would anyone know what type of lawyer I would have to go see to assist me in the legal issues and what is needed to operate a web businewss like this?

    Thanks Dan for more input, it's great that some people are helping me here.

  9. #9
    SitePoint Wizard Lil_Red's Avatar
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    Quote Originally Posted by Submerge
    Thanks for the input. This was what I was looking for on that subject, it helps clear a lot about that issue. But I guess it would always be best to run it past a lawyer in the end. Thanks.

    Anyone else have information on this subject?
    Rather than take legal advise regarding W9 and SSN and such on a forum, talk to a qualified individual. No one here is going to being paying fines and penalties if the advice you take is wrong. It'll be you.

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    SitePoint Wizard Lil_Red's Avatar
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    Quote Originally Posted by stickycarrots
    I didn't know that. Thanks!
    If you don't want to give out your SSN, get an EIN. Odds are pretty unlikely that any ad network is going to pay you if you submit an improperly filled out W9 form.

  11. #11
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    Quote Originally Posted by Lil_Red
    Rather than take legal advise regarding W9 and SSN and such on a forum, talk to a qualified individual. No one here is going to being paying fines and penalties if the advice you take is wrong. It'll be you.
    That's what I intend to do, as stated many time prior that I will be seeing a lawyer for my legal advice, but I'd like to not go in fully uninformed and am just seeking information from the forum members first, not using them as my legal advice. Would you know what type of lawyer I would be best fit to go see on issues of web businesses?

    Quote Originally Posted by Lil_Red
    If you don't want to give out your SSN, get an EIN. Odds are pretty unlikely that any ad network is going to pay you if you submit an improperly filled out W9 form.
    I don't think that was his whole intent of posting, he's an affiliate manager for an ad network, he's not looking into giving his SSN or EIN to other networks.

  12. #12
    Non-Member demosfen's Avatar
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    ** Don't read if you are a big government person, you may be offended **

    Why not ask IRS? For all practical reasons, I would be more worried about what IRS wants me to do, rather than what lawyer tells me I can do legally. I don't see myself suing IRS.
    Government agencies don't have power to make laws, but sometimes they try to. IRS is notorious for overstepping its' authority. A man here in Brooklyn won in federal court against IRS after they fined him for signing his tax return 'under protest'. (Protest is a Constitutional right and is also allowed by UCC). IRS said, to hell with federal court. You still have to pay. (I don't know if they were able to enforce it). There is a court decision from last year that IRS can't seize property without court order, if I remember right - they keep doing it. There are more examples.

    I'd skip lawyers and get your answer from IRS for free. Lawyer would be familiar with the tax law, but probably not with 17000 pages of IRS manuals (an accountant, maybe).

    I would also want it in writing and with statutes cited, from their legal dept., not from customer support clerk

  13. #13
    Non-Member demosfen's Avatar
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    Here is a good article -

    http://www.apfn.org/apfn/ssn.htm

    (The way I understand it you MAY deny doing business with a person who doesn't provide SSN, but you don't have to. Emphasis mine. Also if you click the link there is info about a company that lost in court after denying employment to someone who didn't have SSN for religions reasons)



    PART II OBJECTING TO REQUESTS FOR SSNs BUSINESSES REQUESTING SSNs

    1. Do I have to give my SSN to "XYZ" Company in order to get [some service or goods]?
    Answer: No, but you may be denied the service or goods.

    When an individual and a private company engage in any business transaction they are actually entering into a contractual agreement - whether written, stated, or implied. The contractual "terms and conditions" (which may be included in a written contract or may simply be a "policy") may include a requirement for a social security number as a condition to conducting business. In such case it is totally up to the individual to decide whether or not they want to conduct business according to the contractual terms. If the person does not agree to the terms, they will notbe able to conclude the transaction. It's that simple. There is no "law" specifically requiring a private company to conduct business with a person who refuses to comply with their contractual terms - even if it includes a requirement for a SSN.

    The Social Security Administration in their publication "SSA Publication No. 05-10064", July 1997, regarding business requests for social security numbers states:

    "If a business or other enterprise asks for your Social Security number, you can refuse to give it to them. They may have another method of keeping their records. However, this may mean doing without the benefit or service for which your number was requested. Giving your Social Security number is voluntary, even when you are asked for the number directly.
    "If requested, you should ask- "- why your Social Security number is needed; "- how your Social Security number is going to be used; "- what law requires you to give your Social Security number; and "- what are the consequences if you refuse to give your Social Security number. "Answers to these questions will help you decide whether you want to give your Social Security number to get the benefit or service. The decision is yours."

    The Social Security Administration recognizes and acknowledges the fact that in some cases individuals may not be able to "buy or sell" if they refuse to give out their social security number. However, many businesses will agree to use a number other than a social security number if asked to do so.

    If you decide to resist giving out your social security number to a private company but you would like to do business with them anyway, you need to determine why they want your number. The two most likely answers are: 1) They simply want a unique nine digit number to enter into a computer database so that they can identify and distinguish you from other customers within their record keeping system; or, 2) They want to obtain a "consumer credit report" for use in determining whether they want to extend you credit. In the latter case, the business may have a contract with a credit-reporting agency to "exchange" information about you and your account, typically using a SSN. Both of these "reasons" can be satisfied, upon agreement, without necessitating the use of a SSN. A credit report can be obtained without using a SSN.
    Once it is determined exactly why the business wants to obtain a SSN, then determine whether an alternative arrangement can be worked out.

    The "simple" answer to the question as to whether a person must give their social security number to engage in some business transaction is "NO". But the business may refuse to conduct business with the resistor. The options here are to either: 1) give out your social security number; 2) do without the goods, benefit, service, or access; 3) persuade the other party to amend or modify the contractual terms and conditions; or, 4) sue the other party in court - the grounds for such suit would have to be determined by tort merits of the complaint (perhaps discrimination).

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    Wow demosfen, you are really going up and beyond to help me here, I thank you for it! That artcile and post really helped me understand the concept of this alittle bit more with SSN.

    Would anyone know of any documentation I would need to keep on file and documentation I would need to report to the IRS? ie. W9 forms, 1090 forms, ect?

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    SitePoint Wizard Lil_Red's Avatar
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    Quote Originally Posted by Submerge
    Wow demosfen, you are really going up and beyond to help me here, I thank you for it! That artcile and post really helped me understand the concept of this alittle bit more with SSN.

    Would anyone know of any documentation I would need to keep on file and documentation I would need to report to the IRS? ie. W9 forms, 1090 forms, ect?

    APFN (American Patriotic Friends Network) is not a good source to rely on for info. They are a very biased group and tend to spread a lot of misinformation.

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    SitePoint Co-founder Matt Mickiewicz's Avatar
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    Quote Originally Posted by Submerge
    The beauty about what I'm drafting up for an advertising network is that click fraud isn't a potential for disaster. The publishers won't be payed based on clicks, but based on an action. An action not based on the publisher's traffic, but based on what the publisher does themselves.
    How do you develop an ad network that isn't based on clicks/impressions/actions generated by the publishers traffic?
    Matt Mickiewicz - Co-Founder
    SitePoint.com - Empowering Web Developers Since 1997
    Follow me on Twitter.

  17. #17
    King of Paralysis by Analysis bronze trophy
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    Quote Originally Posted by Matt Mickiewicz
    How do you develop an ad network that isn't based on clicks/impressions/actions generated by the publishers traffic?
    I think he's just saying he wants to start a CPA network, best of luck to him but I believed in another thread someone stated that there are around 300 such networks already out there that he will be competing with.

  18. #18
    Word Painter silver trophy Shyflower's Avatar
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    Quote Originally Posted by Submerge
    Hey guys,

    Okay, my ordeal is that I have been pondering about starting up an advertisement service, that of which is similar to Adsense, YPN, Text Link Ads, AzoogleAds, CJ, ect. (but I won't be serving contextual ads, it will be a different way of advertising but advertising non-the-less with clients). However, that is not what I'm asking about.

    My question is, how would I go about setting up a business, that handles the same user information as Adsense. SSN, EIN, W-9 forms, and other personal information. I'm sure I woud have to go and register a business license for this, but I have no other ideas what is involved in starting something in this field. I would have to probably get a lawyer to draft up documents, work with IRS and other forms. And also find ways of encrypting data for transferring over the web like credit card numbers and data of the sort.

    Does anyone know exactly, or partially what is needed for a U.S. resident to start something up like this? I just got this idea today, so I'm starting fresh and would like ANYONES input on this matter, who could be of assistance.

    Thanks guys.
    from the scale of the enterprise you're considering, I would suggest that your best bet would be to consult with a CPA in Wisconsin who is familiar with all the state and federal tax requirements. A small investment now, might save you some big financial headaches in the future!
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

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    The ad network I'm trying to get into is in niched market, blog webmasters. And the payment will not be calculated by clicks, just actions of the blog owners. So they will be getting a non-variable payment for advertising, instead of the trafiic variable payment from advertisers such as Adsense or AzoogleAds. Similar to selling private text links. I've done my research, and there aren't that many competitors in this market to worry enough about for now. So the blog owners don't have to worry about their visitors clicking on the advertisements to make money, which is a big catch in making money on the web. Less worry for the publishers to be dependent on traffic drive more willingness to register.

  20. #20
    Non-Member demosfen's Avatar
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    Quote Originally Posted by Shyflower
    from the scale of the enterprise you're considering, I would suggest that your best bet would be to consult with a CPA in Wisconsin who is familiar with all the state and federal tax requirements.
    About SSN or about forms? If about SSN, better ask a lawyer than CPA. It's a legal matter rather than accounting matter. Mine doesn't even know that SSN is optional, although she knows IRS manuals like the back of her hand and charges $85 for 20 min, if it's any indication.

  21. #21
    Word Painter silver trophy Shyflower's Avatar
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    The definitive words in my post... "a CPA in Wisconsin who is familiar with all the state and federal tax requirements".

    In fact, I imagine a face to face with any CPA or other qualified professional is certainly better than taking the advice of some anonymous forum poster.
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  22. #22
    Non-Member demosfen's Avatar
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    Quote Originally Posted by Shyflower
    The definitive words in my post... "a CPA in Wisconsin who is familiar with all the state and federal tax requirements".
    A CPA's wouldn't be familiar with federal or state requirements, only with IRS requirements. Unless s/he also has a law degree

  23. #23
    Word Painter silver trophy Shyflower's Avatar
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    Quote Originally Posted by demosfen
    A CPA's wouldn't be familiar with federal or state requirements, only with IRS requirements. Unless s/he also has a law degree

    And so you are saying then that your CPA, in your experience, isn't qualified to file state taxes. Aren't you from Canada? How would you know?

    My CPA files both Federal and State Taxes and is indeed very familiar with the requirements of both. In addition, my CPA has, several times, contacted my attorney at his (not my) insistance to be sure that he doesn't make any mistakes in business advice he gives me.

    One does really need to wonder what is the agenda of one who tries to discourage someone from finding qualified professional representation. Is it arrogance or ignorance?
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  24. #24
    Non-Member demosfen's Avatar
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    SSN's are issued by SSA, not IRS, and are outside accountant's area of expertise. Certified accountant is like certified plumber, as far as giving legal advice goes. I encourage to seek legal advice from a legal professional and accounting help from CPA

  25. #25
    blonde.... Sarah's Avatar
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    guys please lets keep thius nice and friendly, Submerge - you have got some good advice - now I would suggest you follow it up with professionals

    Thank you

    [thread closed]
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