When I first started to make money online years ago, it was mainly just a hobby. Like many others I wanted to see if I could do it and what the potential was. My job was going downhill and I though that perhaps I could supplement my income a bit online. Not much different than hundreds of people will do today, tomorrow, and every day after that.
However, I was one of the lucky ones that started to make more than pocket money. I soon realized that I was responsible for taxes on the money and figuring out how to better protect myself.
Any person who makes money in a home business is a sole proprietorship by default. Nothing has to be done and the person who is making the money is responsible for the taxes on their personal tax return. Seems easy enough and it is.
However, in this society where everyone sues everyone else for the silliest of things, I was concerned that I needed some protection. My website http://dayjobnuker.com and others were making a bit of money and I didn’t want want to be sued and lose some of my personal money because of some out of control lawyer.
Lawyers are needed but in recent years things have gotten out of hand. They take cases from just about anyone who sues for just about anything. I wanted to protect myself from something like that and thought that getting an LLC might be a good idea.
LLC’s are supposed to separate your personal assets from business assets in most cases thus reducing the risk of losing personal money if you get sued. But there are a lot of conflicting opinions about this as it seems this type of situation has not been thoroughly tested in the courts yet. No one knows for sure if they will really protect you.
Nevertheless, I do have my LLC now and have an “official” business even though I still go to work every morning just the same as I did every morning before the LLC. I hope I never have to find out whether the LLC really works!