24 Mar 11 2:05 am
I am not an accountant but any income over $600.00 needs to have a taxpayer ID. You can request one from IRS or just use social security number. If you make 600 or more you will receive a 1099 form from the entity in which you made the money. You have to file that 1099 and pay taxes on it at the end of the year.
You can be an affiliate without creating a business and just work like an independent contractor does. However, you leave yourself open to lawsuit draining all your personal income if there was ever a lawsuite. That is why you would want to incorporate eventually with LLC or S corp or standard C corp.
Plus having a business allows all the added business write offs. You can have business write offs as well as a sole proprietor or independent contractor.
A word of caution though. Incorporating is a pain. It requires a lot of work and more money. A lot of paper work has to be filed and year end reports. I have had an S corp and nothing but more expenses. I have heard an LLC is much easier and less paper work. Not as much legality.
This past year I just reported mine on 1099 and included my expenses like an independent contractor. With a business you will need to have an accountant and legal representation.
Untill the income flow is regular I would not create LLC. Once you create a business entity you have 3 yrs to make it profitable then the IRS would start to look at you if you have not made it profitable.
Finally, if you don't know how much you will pay you can have an accountant figure out an estimate and just pay estimated quarterly benefits to your state but the first year you are in business you would not have to worry about this as you do not know what your income will be regarding affiliate marketing. You would just pay state and federal at and of first yr. Once you have the first year under your belt then you will be able to know how much quarterly income you would owe to the state and feds. If you do not pay the quarterly then you can be fined with interest.
Michellerana is correct. If you have access to an account speak with them because the laws are changing with our tax codes, plus they can figure the taxes and know the forms.