Get Affiliate Tax Cuts – Start a Limited Liability Corporation!
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Paying Taxes & Starting Your Own Affiliate Business
Monday, Aug 11, 2008
Being an affiliate as a business and having your own company can be both a challenging and profitable affair. One of the things you will have to address is tax issues. An option that often works well for affiliate companies and that gives you a good deal of tax flexibility is an LLC, or limited liability corporation.
“An option that often works well for affiliate companies and that gives you a good deal of tax flexibility is an LLC, or limited liability corporation.”
How does a Limited Liability Corporation work for an Affiliate Company?
One of the advantages of the LLC is that you and other owners are not held personally liable for any legal judgments the company may face, which is ideal for affiliate situations where customers may attempt to defraud the advertiser, either for personal gain or to sabotage the affiliate company.
LLCs for Affiliate Companies and Taxes
If your affiliate company is an LLC, you can choose from a number of tax options. You may choose to be taxed as a sole proprietor, as part of a partnership or as part of an S or C corporation. S corporations do not pay taxes themselves, rather the shareholders must be taxes on whatever income they receive from the company. C corporations do pay taxes.
LLC Tax Disadvantages
Depending on the state, you may have to pay a franchise tax on your LLC. Essentially, this is a fee the state charges for allowing you to have a limited liability corporation and insulate yourself against personal liability. If the LLC should find itself the subject of legal action, this franchise tax may be well worth it.