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Don't mess with IRS !


Registered Member
I have created a new tread to follow up with the one created before. In order to have this forum clear, I am copying the information here:
Originally Posted by lzamora on 10/08/05
I have a couple of ideas (that might not worth a penny), but I want to know, what should I do first? register my bussines before goverment or I can launch with out it and then when it goes up, then register my company? Also, most of these enterprises, just go up and I'm wondering if they pay taxes, or what? Maybe I just keep a good track of earnings and at the end of the year I do evalute to report to IRS.

Second though is, should I partner with a webhost company? or just pay for the basic service and upgrade as necessary? I saw you (Andrew) partner with NURV in several places, should I do the same? do you recommend to do this? Who do you partner for web design? or you pay for the service?

Reply from: IslandGuy on 10/11/05
I might be able to help out a little here. Andrew is perfectly correct that you can just be self-employed and file taxes that way ... you just need to fill out a different type of tax form than the one you fill out if you work for someone else. This allows you to write off expenses of the business - things like your computer even, at least for the percent of time you use it for business and that equivalent value - but (and it's a big but), the IRS usually will only accept it as a business if you actually make money. Otherwise, they tend to consider things a hobby and although you have to pay taxes on the income, you don't get to write off your expenses.

Actually, if you do get involved in some self-employed stuff, most instances can be handled with any one of the computer income tax softwares, as long as you be certain to pick the one that deals with small businesses or self-employment (it's not the basic package but a more expensive one, but it leads you through every possible scenario).

Incorporation is a whole other deal, but it can be simple too if it's a simple corporation. That is dependent more on your state's law though, so I can't really give you much advice. Your local state government should have an info line you can call to see what they require. The main advantage to incorporation over self-employed (depending on what you are selling, making or whatever) is that if you are incorporated and get liability coverage, someone has a tougher (and hopefully impossible) time getting any of your personal assets (like your house) if they were to sue your business. If you're just self-employed, they can potentially get at your personal assets much easier.

At least that's how it was when I was part of a small corporation and I know it depends upon where you live, so you really need to talk to someone in government, but that should be free (after all, that's what we pay taxes for, right?). Incorporation is great for tax benefits and protecting yourself, but there are costs involved with it too, so you really need to check things out.

Don't know if this helped, but hope it gives you a little idea or a place to start from anyway. :)


Registered Member
Thanks IslandGuy and Andrew. Following up with this I just found that in order to create a new Corp, you have to pay $1300.00 and the lawer told me you could fill out debts for 5 years in a row, and then after you have to fill earnings!... This might be something the goverment took from years of experience and it is a good option to let a bussiness get mature to start charging them.


Registered Member
This was another answer from IslandGuy:

Originally Posted by lzamora on 10/08/05
I have a couple of questions, for Andrew maybe.... How do I register my company, or furthermore, how this kind of entreprises are paying to IRS? If I create my own Venue, will I at some point be in trouble if the bussiness expands? what is the floor limit of earnings to don't pay taxes? being a lot of these kind of venues, how come IRS monitors internet bussiness? or simple IRS let them go? thanks

Reply from IslandGuy on 10/11/05

Hi Izamora,

I'm going to wade in here again with my two cents worth.

--- Section cut, not related to this topic ----

Anyway, to maybe help answer some of your questions, as far as I know, the IRS is currently looking for a way to monitor internet business, which is part of the reason they are fighting the U.N. over who actually controls the Internet (but that's a whole other story :shake: , which is puzzling).

Still, if you have significant income off the Internet, the IRS expects you to treat it as income ... self-employed income, since you are working for yourself. Are you based in the U.S.?

Although in truth, a lot does get by the IRS, I can say having working for a tax attorney for about 7 years, I would never mess with the IRS, but then I'm not much of a risk-taker :) If they audit you and you have undeclared income they discover, it can turn into a real nightmare. I've seen some people go through a whole lot more in lawyer's fees fighting the IRS than they ever would have paid in taxes on the money they made.

Sorry to be kind of a downer about this, and it is just my humble opinion, but I believe in being totally up front with the IRS, not because I like it, but because I know the power they have and how they can really mess your life up if you're not paying taxes you should and they catch you. It's not a pretty sight :-/