Need Help: Do I need to be a "business"?

Hi!

I recently started a website. At first, it was for pure fun and a social atmosphere, but soon it ended up blossoming a bit. Little did I suspect, I started to make money from it.

I am starting to get anywhere between $400-600/month and I am beginning to get worried. Do I have to set it up as a business now? Where would I do that? How? How much?

I notice that on a lot of ad networks or sites that I'd be interested in, they request you put in the business name of the website?

Does that mean they want the business registration from places like GoDaddy? Or an actual business to be registered in the name of the website? I've never done anything or even thought I'd need to do anything (well, with my track record on making successful websites)

Any help would be greatly appreciated!!

 

It would take a book to answer all those questions properly
Some quick general answers,
I am in the USA so I don't know for other countries.
As far as the IRS goes, you are a business now. You are making money! That is a good thing except that the IRS will want a share. How much they will want depends on how many deductions you have etc.

Right now you would be considered a sole proprietor. In the future you may want to become an LLC or a Corporation for tax and liability purposes. This will cost you money in the short term because you should go to a professional to get set up right.

My advice is to read a good book on starting a business to get the basics, and then schedule an appointment with a tax professional that specializes in business. It will cost you a few hundred dollars, but will probably save you much more than that over the long haul.

 

Honestly, you would want to start separating your business and personal accounts and liabilities. This includes either setting up a DBA, or LLC and then getting a business bank account.

You would want to keep your business and personal separate should something come up later. As for tax purposes, you would want to take to your CPA on how he wants you to keep your records for business and personal expenses. Each one seems to have a different way.

For me, they recommended keeping it all separate so all business transactions show up on business accounts. That way is it nice and clear if you ever get audited and easier for them to track what is true business, and personal come tax time.

Good luck.

 

Thanks for the replies.

 

A big factor I would say is, it depends on the website you have.

 

You can put your own name for the business name if you are running it as a sole proprietor. However, as others have mentioned, you should definitely consider going llc, scorp or something else. This will make your business a separate entity which will save your ass if you ever get sued or anything.

 

If your biz is service related for example webhosting company then you need to register offline.
But if the earning is from adsense then its no need to register.

 

I should have clarified a bit for the ones who have replied.

The website in question is a browser game. Php-based. 90% of my profit comes from paypal (to get a premium currency in the game, or subscriptions), and the rest is from adsense itself (which is a small portion, given what paypal makes).

I recently expanded into allow players to pay via mobile when I started to think that I should kind of put the breaks on and see if there was anything I should do prior to it.

 

Ah I see, I have had my own browser based RPG before and got friends who still have them. I would say that you are not necessary to register as a business unless you considered to make a network of games for example and your main income was from it's revenue. But with the premium in-game benefits make sure you always claim it as 'Donations' to the website and not a product that you sell. In return for the kind gesture, you will give them benefits. This way you should be fine and you won't need to be taxed on your donations of such.