LLC, state, federal?

Crestwood

Hey all, I just have a few questions that need some clarification.

I live in Missouri and have to pay state taxes, but need some clarification. Should I register an LLC? Do I need a federal EIN, or can I just use my SSN? I am getting conflicting answers from people I work with. They are not 100% sure, especially when it comes to selling virtual goods online.

Any advice would be great. When I start raking in the big bucks, I need to make sure I have it right. ;-D

butterbean

Hello!

You don't have to register an LLC if you don't want to - if you're just starting out in the app biz, I'd suggest just selling apps under your legal name until you start generating more income - if you don't want to use your legal name, you can file a fictitious business name with the county you live in, and file a business with the city - you can still use your social security number for tax purposes with that (I believe) or you can also obtain an EIN number from the federal website if needed.

If you want to go the LLC route, I would suggest filing it as an LLC, and taxing it as an "S-Corp" for tax purposes - you save a lot of money doing it this way, and avoid paying the LLC tax for the first year. Talk to your accountant about this - most would suggest going this route. Again, I'd only suggest doing an LLC once you start making a significant income, or at least minimally, more than the LLC tax you get charged annually.

If you file an LLC - you do in this case need an EIN number for sure.

The LLC fee varies from state to state, but California is the highest ($800 a year I think..) which is absurd, but most other states don't charge as much.

Hope this information helps!

Crestwood

Thanks for the reply butterbean!