should domainers incorporate/LLC? and a question on cybersquatting

[Focus]

none of their damn business what we do imo....corporate legal eagle reverse hijackers! k:

 

[Bob]

I have two S-corps to protect my interests (with possibly THREE more on the way). One of the corporations deals only with domain names. I keep them separate from everything else for asset protection. The tax advantages to incorporating are very nice. For me to incorporate it was about $1200 per S-corp, but I used a lawyer. I talked extensively with my lawyer about S-corp -vs- LLC. For most situations, there is no difference.

If you are not doing a lot in domain sales / revenue, then keeping it an Sole Proprietorship is not a bad thing, except for your personal liability. I operated as a SP for five years and a schedule C. Once you start to make some decent money via domains and revenue, then it REALLY makes sense to incorporate. You can even incorporate and use yourself as all officers in the company! That makes it fun when you have a company meeting. You get to sit around and talk to yourself

-Bob

 

[Theo]

Bob, meet Bob the CEO. Hi Bob, this is Bob the CFO. Nice meeting you Bob! Did you talk to the Marketing Director? Who, Bob? Yes, I did. We'll meet with Bob, the Project Manager at 5pm; also Bob, the President and Bob the VP of Operations will be present. OK Bob, see you there at 5pm. I will ask my secretary, Bob, to prepare the memo.

 

[wishmeluck]

Gotta agree, go official if youre planning on doing this seriously.

I just got starting in this a few weeks ago. Bought 150 names under my personal acct, but need to switch that over and incorporate. As everyone says, this is mostly for your protection.

I thoroughly researched the options and can tell you that there *IS* a difference between LLC's and S-Corps.

I was all set to do an LLC b/c it has many advantages-- mostly simplicity related. BUT -- turns out you will be paying about 15% more in taxes this way over an S-Corp.

LLCs have to pay a self employment tax up to about $90K of 15%. Anything above $90K is always be subject to about 2-3%.

So the hassle of having to do qtrly returns, which I'll have to learn to do,
seem well worth it to me. Especially if you plan for high earnings.

Not to hijack the thread, but another interesting related question is:

What state should you incorparete in? Is a DE or NV incorporation worth it?

The jurys out. Ive come to the conclusion that if you need privacy, that NV is worth it, which basically copied DE laws. The DE laws are well understood by lawyers so it can simplify things. But for most people I don't think this is necessary. However, in my case, since I plan on moving, than the DE option might make sense as I can bring my business with me easier I think, by just creating a DBA/Ficticious name in each state. Athough perhaps it's possible to keep the non DE/NV original corp even while residing in another state with a DBA in the new state, I don't know.

Will be figuring this out soon as I plan to inc. within the month.

I have two S-corps to protect my interests (with possibly THREE more on the way). One of the corporations deals only with domain names. I keep them separate from everything else for asset protection.

Bob - are your other 2 businesses totally non computer, non web development related?

I was thinking of perhaps separately out web projects. Of course in the development game, any single property could one day warrant its own business...but for me right now I think one is MORE than enough

Steve

 

[Theo]

LLCs have to pay a self employment tax up to about $90K of 15%. Anything above $90K is always be subject to about 2-3%.

Where did you read this? The 15% tax bracket applies to capital gains - sales of domains, for example, that were held for 1 year; but then again, any associated purchase cost would be deducted.

 

[HomerJ]

Steve, be careful on the tax issue, i found that lots of people, small business owners, book-keepers, were all quite good at giving contradictory information about this and all very confidently no less. as i understand it though a coporation incurs double taxation, that is, if you pay yourself a salary, then the company pays a tax on its profits, and you also pay a personal income tax on your salary, 'double-taxation' ... whereas with an LLC, you have the opton in the beginning to elect for either/or, .. either to be taxed as a corp, as above, or to be taxed as a sole propietor, in which case it is called pass through taxation, the company profit is 'passed through' (figure of speech) to you as income, and only pay a tax on it as income .. no corporate tax. (although in some states you still pay a 'franchise tax' if revenue is greater than some amount.)

although i am not a tax professional, so don't act according to my advice, but always seek advice from a certified tax pro.

regarding the LLC/Corp being out of DE/NV, there are certain advantages, but realize that ultimately you must also file your corp/LLC in whatever state you are doing business in (with certain exceptions) End result, a DE/NV llc/corp that is a home-based business operating in a state other than DE/NV will have to also register that Co. as a foreign entity in the home state, meaning you should ask, are the advantages worth the double-filing, double-hassle, double-$$, vs. just registering in your home state?

again, best to consult a lawyer early on. i waited, thinking i could navigate all of the menusha myself. was not worth the headache in the end after talking with a lawyer i found out pretty much what i needed to know. penny wise, pound foolish .. you know. best of luck.

 

[StockDoctor]

Cybersquatter: The illegal act of buying up domain names and “sitting” on them with the intent of making a large profit off the sell. Cybersquatters will often buy out large quantities of names, trademarks, or highly marketable names to try to make a buck or prevent others from lawful use of the name.

The media sure can mess this up. It's really very simple.

There is domaining "the investment or trade in free market domain rights" practiced by Domainers.

There is squatting "the acquisition or trading (thru bad faith) of urls based on the intellectual property rights of others, practiced by Squatters." There are two types of Squatters, cyber and typo.