Once upon a time I agonized over perfectly planning out every facet of a business before jumping and and actually trying to make it work. I’d write up complex operating procedures, create charts of accounts to prep for financials, and basically do anything except the work required to create revenue. I’m still a little anal about those things, but I’ve gotten to where they don’t bother me nearly as much as they used to.
Understanding legal structures and taxation issues is an important part of being a business owner, but it’s not the most important part. They are necessary evils that have to be dealt with, or at least planned for, anytime you want to engage in a revenue generating activity, and this project is really no different. I need to know what type of business structure I’ll be operating under, and I need to know what to do about paying taxes.
I was pretty sure going into this project that it would simply be done as a sole proprietorship. My affiliate site is essentially a blog that gives opinions about products I encounter. I won’t be partnering with anybody, and I’ll be acting as in independent contractor for any company who’s product links I happen to put on on my site. There is very little risk of legal issues and there are no customers to deal with. So, as far as I can tell, a complex legal structure isn’t necessary.
Taxation is equally simple: a 1099 given to me by Amazon or eBay at the end of the year will help me complete a schedule C on my personal tax return. There are some special considerations for filing quarterly taxes (federal & state) but it’s unlikely that I’ll hit those benchmarks very quickly. When and if I do hit those thresholds, I’ll start filing quarterly.
If I ever take on partners, I’ll definitely create a legal partnership agreement. If my business reaches a point of increased legal exposure I’ll probably choose to form an LLC. I like the simplicity of those types of structures. Either of those would be a new experience for me, but I’m confident I can cross those bridges should I ever get there.