Time for Business Accounts? | Bloggers Lair | Yakezie Forums

financialstudent said:

Hey guys, wanted to get your opinions on how to handle blog finances.  At what point is it time to open up separate business checking/savings/PayPal/etc. accounts to handle the income from blogging? I made around $1,200 last year in private ad sales and a bit from Adsense. I just had the earnings sent to my personal PayPal account and then transferred them to a savings account at ING Direct specifically for the blog.

I expect my income to grow this year – I've already had one advertiser contact me and Adsense is picking up. Am I ready for new accounts? 

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I already had everything separate because of my offline business. But even if you don't have an offline business, I would have everything separate immediately. It makes it so much easier if you ever grow.

Financial Student–Great question.  My husband and I were just talking about this.

 

Kaleef and Sandy–I have an offline business also that I am in the midst of shutting down (ever so slowly!).  Could I also put the blog income in there or should I open a separate account just for the blog?

Post edited 9:17 pm – January 7, 2011 by financialstudent

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It sounds like separate accounts are the way to go! I'll put that on my to do list. Sandy/Khaleef, would you recommend an LLC at this point? I've read about them and it seems the main benefit is protection from liability along with some tax advantages. I don't think I'm quite at that point yet, so separate accounts and filing taxes as a sole proprietor (schedule C) seems like the way to go. Does this sound correct?

sandy@yesiamcheap said:

@financialstudent Yes, I'd do a sole proprietorship for now

@Melissa That's exactly what I did.  I wound down and closed my brick and mortar and report the income for that LLC's name.  Remember, the LLC is a separate entity like a living breathing person.  Just because you close the business doesn't mean that you close the corporation.

 

It seems like Khaleef and I are cloning each other.  :)

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Yeah, it really does! Let's just hope I don't have to deal with an experience like your tenant!

Hi guys,

 

Do you need to file anything to the state saying you're a sole proprietorship?  Also, the danger of this is your personal assets is at risk if your business gets in trouble, right?  Got bits and pieces of info in my head, just trying to piece it all together.

Post edited 7:07 am – January 8, 2011 by Jackie

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My two cents on some of the questions in this thread:

 

I earned income from blogging (and web design, originally, then later also wedding photography) as a sole proprietor for many, many years without having separate accounts for business and personal. However, I did ALWAYS clearly separate my business and personal expenses using spreadsheets and Quicken.  I was religious about that, and still am.  At one point I met with a CPA because I had a question, and he recommended setting things up separately and using Quickbooks. Then he saw my spreadsheets and said nevermind, you're fine. Of course you should get your own advice from a professional, but that's my experience.

 

That said, I have had more than one business account. Two were due to a partnership, which of course is not a sole proprietorship. I now also have a separate account for my business (which includes iPhone apps as well) because of the iPhone apps. Basically Apple would not send me money under a business name unless I set up a business account, so I went ahead and did so.  I do have an LLC.

 

You'll read a lot of places about LLCs being good because they protect your personal assets, etc. If you are a blogger though, and your busniess is blogging in a way that you are essentially the business, it is likely going to be very easy to "pierce the veil" of the LLC and go ahead and say you are personally liable. After all, if for example you were to say something slanderous, well, it'd clearly be you saying it. For liability reasons, insurance is often a good idea.

 

I would not have had to file anything with my state as a sole proprietor if I had just used my own name as the name of the business. However every state is likely different. On the other hand, I have filed to use a fictious name (a business name other than my own). And of course depending on what you are doing in a business you might have to file for a sales tax license with your locality, county, state, etc.

 

Again, the above is all just my understanding of how things work, and I'm not a lawyer or accountant or what not.  Probably your state has information about these kinds of things available online too.

as soon as you can separate your personal life from your business' life, the better. that includes incorporation, a separate EIN and a separate bank account. try not to co mingle accounts either which is easy to do with blogging since you can have all funds deposited in your biz bank account.  at some point, getting lawyers involved is not a bad idea either

I'm back!

I've been doing more research and reading all the info the IRS puts out. As a sole proprietor, I don't need an EIN. I even found one IRS webpage that said they reccomend just using your SSN. But it seems like an EIN would be a good way to keep things separate. Yay or nay? I read that using an EIN can seem more professional when dealing with banks and other businesses.

 

You guys are crazy helpful! Thanks!

Post edited 10:55 am – January 17, 2011 by freeby50

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Jackie said:

 You'll read a lot of places about LLCs being good because they protect your personal assets, etc. If you are a blogger though, and your busniess is blogging in a way that you are essentially the business, it is likely going to be very easy to "pierce the veil" of the LLC and go ahead and say you are personally liable. After all, if for example you were to say something slanderous, well, it'd clearly be you saying it. For liability reasons, insurance is often a good idea.

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I think that makes sense.  

I think LLC is more useful if your business has debt or other liabilities.    For a  blogger the only real liability should be bad advice or libel.  

A generic disclaimer in your footer and avoid unfounded attacks would be better protection than an LLC for a blogger.

Libel would be a conccern probably mostly with businesses.   Even small blogs can gain the attention of businesses especially if your attacking them.   If you make unfounded attacks on a business or individual then you're opening yourself up to a libel suit.

An LLC will not protect you from libel suits.   When you personally do something against someone directly the LLC doesn't matter.

I am not a lawyer.

If your company is a one person LLC not many banks will loan your company money without you personally guaranteeing the debt so an LLC is not much help there.  I am not a lawyer but I'm sitting for the bar next month so I'm hoping that will change soon.  In my state you can establish an LLC by filling out a simple form online and paying a $50 fee.  For that price it is probably worth setting up an LLC or whatever protection it provides.  Getting a business account is also cheap and simple.  That being said I haven't done either one yet.  Those are both things I'll do this year.  This is nog legal advice. :)