Is it better to be incorporated or a Limited Liability Partnership? I'm only a one-person company presently in USA.

As a hosting reseller, do I have to pay taxes on internet income? If so, do I just charge people sales tax that are out-of-state?

I don't believe you charge any tax to those out of state...

otherwise pay your taxes and charge taxes for those within your state.good luck!

Ok here's the definition of LLC. and LLP. as you can see to be an LLP you have to have more than one partner, which you don't. Your best bet is to set up an S-Corp. S-Corp advantage is it is the same as a regular corporation but the income from the business is not taxable at the corporate level and is only taxable when it is distributed to the shareholders. So if you are growing your business and don't pay yourself you don't have to pay corporate taxes.

An LLC may be a sole proprietorship, corporation, or a partnership. (A minimum of two members is required for federal tax purposes to operate an LLC as a partnership.) Consequently, the applicable tax forms, estimated tax payment requirements, and related tax publications depend upon whether the LLC operates as a sole proprietorship, corporation, or partnership. The default entity for federal tax treatment of an LLC with two or more members is a partnership. The default entity of an LLP is a partnership and the partnership tax forms, estimated tax payment requirements, and partnership publications apply.


Your second question.

Do not confuse income taxes with the sales tax.

Depending on how your company is set up you might have to pay taxes twice first time on the net income of your business. and second time on a personal 1040 form on any distributions you received from your business. As I said if you are S-corp or LLP you don't have to pay taxes on the business level.

Sales tax is levied by each of the respective states. And it is your responsibility to know which state charges how much tax then collect said tax and then remit it back to each state at year end. I believe that right now by the act of congress no sales tax can be levied on e-commerce sales. This is about to change though. You can read this article to get some idea of what is going on.




http://www.ecommercetimes.com/perl/story/11590.html http://www.ecommercetimes.com/perl/story/11590.html

Originally posted by chrisb
Is it better to be incorporated or a Limited Liability Partnership? I'm only a one-person company presently in USA.

As a hosting reseller, do I have to pay taxes on internet income? If so, do I just charge people sales tax that are out-of-state?
You should do one thing, and one thing only: Ask a CPA this question. What is right for one person in one state in one situation, is not necessarily right for you.

misread earlier message - disregard please.

Originally posted by Chicken

You should do one thing, and one thing only: Ask a CPA this question. What is right for one person in one state in one situation, is not necessarily right for you.

Hmmm... I don't know about that. I hired a CPA once to do my taxes, and that was the only time my taxes were done incorrectly. Thanks for all the info though, everyone. I really appreciate it.