Business Structure for Website

I have a website and it now looks like I am going to get some advertising (thats all we do). How should I structure the business to give me the best advantages for taxes and all that good stuff. I have even read a bit about overseas companies with onwning websites - sounded borderline but if it is legal - any ideas?

How much expected revenue? What state?

Lets say 10k to 20k

I am in NY

I’d stay a sole proprietor unless you have some special needs or liability. You can always form an entity when the time is right, but with that much revenue you probably won’t see much benefit right now.

This is a good question to ask now joey. And its also dependent on how much you want/expect your business to grow.

It can be important to take care of these matters now as depending on your country you live in, converting into a company structure at a later stage can be costly and have tax implications. Firstly, a company is a seperate legal entity, therefore to obtain the website from you as its own asset, it would need to pay for it.

So depending on your countries rules, the website may need to be valued and may become worth significantly more and have to be paid for by the company, creating a tax liability for you on the gain in value. However this might not be an issue as you may be able to contribute the website to the company as a tax free capital contribution.

And obviously there could be many other possible implications, so best to speak to an appropriate person about it, if you do think you may want a company at a later stage.

Very ambiguous advice.

Actually, it’s incredibly rare for a website to gain such value that is causes problems when you initially form an entity around it. Typically if you have to actually capitalize the entity by ‘selling’ the site to it, you can do it with little cash involved and wind up having a tax advantaged transaction. In most cases, you can simply give the asset (website) to the company as many start ups use a pass-through entity that would allow that as a tax-neutral event.

The only cases where you would have to pay taxes would be if you had outside capital (investment) bringing cash into the company, and for some strange reason you were forced to value the website at a high price and actually sell it to the company. If that were the case, you would be paying taxes on income earned due to the sale of an asset, which sounds like a good thing to me. A website making 10k - 20k isn’t at risk of that, and even a website making 250k can be easily transferred into a business in most cases without tax implications.

As a rule, if you aren’t making enough money to make incorporation worthwhile tax wise, you shouldn’t do it unless you are seeking (and actually need) liability protection. Usually you’ll make a much better decision about which entity to use and how to set it up when you have something that is already in operation as opposed to predicting the future.