Results 1 to 9 of 9
  1. #1

    Do I need a registered business?


    I have a web application for real estate agencies. This application helps them create/update their websites and provide their listings. Including the hosting, I am ready to let the real estate agencies use it yearly for a small amount of $$.

    I have a paypal account which was upgraded to business account free and no questions asked. Paypal did not ask if I have a business (title, licences etc).

    At the beggining, I do not want to open a business before seeing where it goes.

    My question is about doing this without registering a business. I already have around 120 agencies who are willing to pay (Currently I am doing it for free and tired of getting nothing except google adsense support).

    This is not about escaping the taxes or anything. I just do not want to deal with openning a business even though it is easy. Can I do it without a registered business and pay the taxes by providing my income? What are the negative sides of it. Again, having an official business helps getting customers and so on. Any thoughts?

  2. #2
    If you have a PayPal business account you will need a bank account in the name of the business so that you can transfer funds out of PayPal. You could, I suppose, use your own name for the name of your business so that you could transfer funds to a person account.

    We use a business name and have a bank account in that name but PayPal did not ask for any evidence that the business is registered in any way.

  3. #3
    Thank you for your reply.

    What I am understanding from your reply is that this can be done without having a registered business name. I have a business account with paypal and I have my debit card (i know it is not supposed to be a personal debit card) and paypal confirmed that it is valdi and I can use it. No business account was required...

    Is this correct?

  4. #4
    That is correct. You don't have to provide any proof to Paypal that the business name is registered.

  5. #5
    Quote Originally Posted by george48
    My question is about doing this without registering a business. I already have around 120 agencies who are willing to pay (Currently I am doing it for free and tired of getting nothing except google adsense support).
    Cautionary tale: This has happened to two friends, both living in different cities and both with start up businesses. Neither business was on the Internet at the time.

    After a few months of running their business out of their homes they were contacted by the city telling them that they needed to get a business license. In both cases they suspected the mail delivery person as the person who reported their business.

    It's only a matter of time before cities strapped for money (are there any that aren't) will start scouring the Internet looking for startups that list their city. Won't that be an interesting day.

  6. #6
    Join Date
    Nov 2005
    Michigan, USA
    You will definitely want to register as a business. I suggest an LLC for most cases therefore if something does happen your personal assets aren't at risk. If you have 120 agencies that seems like enough business to have cause to register.

  7. #7
    There are different "levels" of governement that you must consider.


    You can continue without registering your business. This is called a "sole proprietorship". Basically, you are your business. Any income is reported on your yearly PERSONAL tax return. You can still "register" your business at the municiple level and operate as a sole proprietor. In fact, this is probably required if you live in the US/Canada. There is usually a small yearly fee for this.

    Note, that you CAN still use a "doing business as" name and opereate as a sole proprietor. In this case, you'll probably have to do a name search with the local business (municipal) authority, and then "register" your name.

    If you decide to register your business, then you would "incorporate" or form a limited liability partnership or corporation. What this means is that your business is considered (by all forms of authority) as a SEPERATE ENTITY from you. So your business pays its own taxes, etc... and then you can pay yourself a salary and/or a bonus, etc.. (your accountant would help with this to determine the best method, given your situation.)

    There are usually two big advantages to forming a corporation and keeping your business sepereate.

    First, is that a seperate incorporated "entity" is .. seperate. So if your realtor customer's server dies and they lose $50k and sue you for damages.. they are not really suing "you".. they are suing the company. If the company loses the suit, it will not effect you personally. (Although there are many considerations here, especially if you are a "director" of the business.)

    The second advantage is that usually, a corporation pays less tax then you would personally.

    So.. let's say that your company makes $100k this year. If you are operating as a sole proprietor, you might have to pay 35% tax on that. So you really only "keep" $65k yourself personally. You have NO CHOICE in this. You MUST pay tax on everything your company makes. You can't put it off, etc..

    Now let's say you're operating as an incorporated company. You have many more options. You could pay the corporate rate of perhaps 14%, and that's it. (ie: Don't pay yourself anything.. roll it all back into the company, etc.) Or you could then pay yourself a bonus of $25k and roll the rest back into the company. (In which case, you'd pay only a max % rate equal to your personal income tax amount, since you already paid corporate tax on it.)... etc.. an incorporated company has lots of options here, whereas if you're a sole proprietorship, you simply pay your full tax amount on everything you have. No ands, ifs, or buts.

    I hope this helps.

    My suggestions is to operate as a personal sole proprietorship (properly registered in your city, of course), and then "do business as" some name that sounds appropriate.

    Then, once you get to a point where your income/revenue makes it worthwhile (ie: you don't need all the money, or you want more tax options), you should incorporate.

    Good luck!
    Want to sell domain names? Sign up today for an reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  8. #8
    Both above posters offer excellent advice.

    I'd add to sure to pay the taxes...more people get into trouble trying to cheat the IRS...bad idea.

  9. #9
    Thank you guys. Your answers clear a lot of questions of mine.

    It was not the taxes that created the problem. I know one thing, Do Not Mess with IRS. However, the issue is that I am an H1B visa holder which naturally does not allow me open a business. I have a full time job and currently working on getting my green card. However, it will take 2-3 years to get the green.

    In addition to having a full time job, I created various web applications (like turnkey style websites- but completely coded and designed by me and they have been available free to everybody. After 3 years of work, I have around 13.000 registered users using these applications. I have googleadsense placed on the applications and this helps me pay off the server costs.

    However, as the number increases everyday, and people ask me about the possibility of removing the ads for a small fee, or sell the code to them, I started thinking about it. I thought that using paypal would be the best solution however you all indicated that one way or another, I need a business.

    Therefore I have two choices 1-Partner with somebody who can open a business, 2-Forget about the whole thing

    What do you think?

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts