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hideous
Joined: Aug 03, 2005
# Posts: 14
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Posted: 08/05/2005 01:40 am
I am about to start working with affiliate programs for an industry that operates completely offshore.
All of these companys have options to pay you through a service that is also offshore.
So to the US all i would be doing is gettign a check or using an ATM card, through this third party payer?
so for legal and taxing purposes where is the business ?
Is it where the TLD is i am using a .com
is it were my server is located
(if so can i get a host in a country without corporate income tax and friendly corporate law ?)
is it where i start it ?
(I plan on moving alot)
is it where i am at at any given time ?
(i plan on moving around the Us and outside of it)
I have started a business (corporation) in my own town before so i know the basics of biz lisences etc. but with this internet thing i am not actually selling anything, simply getting a %'tage of rev, so to me i am not really located anywhere.
Thanks for your help.
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bhartzer
Staff
Joined: Jun 08, 2000
# Posts: 7036
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Posted: 08/05/2005 12:09 pm
As an affiliate, you're generally responsible for paying your own taxes on any income you make. Consult your accountant, but individuals normally pay taxes on affiliate income just as if they were self employed.
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hideous
Joined: Aug 03, 2005
# Posts: 14
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Posted: 08/05/2005 02:12 pm
well i called a few CPA's in my area to ask them about this.
and it seems you have to follow laws, get business lisences, etc. For any business location that you conduct business in. And in some cases in the jurisdiction you are a resident as well.
Then i say to the CPA, that sounds liek a lot of trouble.
How does the US know ? I mean offshore partners that pay thru an offshore third party. All i am doing from the US is requesting a check or using the ATM card of the third party.
HE informs me that there is some law now becasue of the patriot act that says if i have any sort of offshore accounts that have 10000 pass thru them then i must fill out a form to the US that says where i got the money from.
HE wasnt too sure on the specifics of it he couldnt remember if it was 10000 balance at one time or pass thur, and if i had multiple account numbers at the same bank etc. SO i have to comtact some government agency no doubt to figure this out.
I dont want to get out of paying tax, (although it would be nice) but i wonder how fair it is to require someone to learn the business laws and get lisences in every location they travel thru.
And what if i dont actually update or change a page, then did i really do any "work" there ?
Then on the otehr hand, if i live in australia for a year why would the US get anything ? shouldn't australia get income tax ?
They US and the world needs to make this whole taxing thing a lot easier.
article about IRS off shore taxes
http://www.irs.gov/businesses/small/article/0,,id=121175,00.html
[ Message was edited by: hideous 08/05/2005 07:07 pm ]
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beth_lk
Staff
Joined: Jun 23, 2004
# Posts: 1139
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Posted: 08/05/2005 04:31 pm
I don't know about offshore and the other country thing and such - but I do know that very few CPAs know much about the Internet and the tax laws of doing a Internet business. I made a LOT of phone calls before I found someone who knows. Ask right up front if they have experience with internet tax laws. You can also call or visit your local IRS office - they really don't bite ( too hard lol ) 
I make 99% of my online money from affiliates and I have a TIN ( tax id number ) and a company name and a separate bank account that all my online income goes into and expenses are paid out of and at the end of the year my CPA tells me what I owe out.
Not sure if this is helpful to you or not...
Beth 
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OAC
Staff
Joined: Jan 25, 2001
# Posts: 6794
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Posted: 08/05/2005 11:07 pm
"legal and taxing purposes where is the business ?"
As you refer to an ATM card, it seems that you haven't formed a corporation to receive the affiliate income, therefore the "business" entity is you.
You don't mention it but I am assuming those paying you affiliate commissions do not deduct tax from your earnings.
As US residents pay taxes on their worldwide income, the IRS doesn't care in which country the TLD or the server resides - it only cares about where you reside.
And if you spend 183 days or more in the US then you are a US resident for taxing puroposes and thus must declare your worldwide income to the IRS.
The IRS doesn't care whether your "businesses" are located in Tuscon, Toronto, Tehran or Timbuctoo - they want you to pay tax on your worldwide income.
So, for taxing purposes, the business is located where you are.
Although you are required to pay tax on your worldwide income, if some or all the overseas businesses have deducted tax from your affiliate commissions, then you will receive credit (you must provide proof) for the taxes deducted.
Hope this helps.
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hideous
Joined: Aug 03, 2005
# Posts: 14
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Posted: 08/06/2005 01:15 am
thats exactly what i wanted to know thansk alot everyone for your responces.
For the record, if or should i say when i start making money, i will do the corporation thing. I have done it before but its a little spendy and i want to make sure i can actually make something first.
Ho long does one have to live outside the country before they do not have to pay here and then i would assume have to start paying in another country ?
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OAC
Staff
Joined: Jan 25, 2001
# Posts: 6794
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Posted: 08/08/2005 03:25 am
Can't remember exactly - probably a year. But you must prove to the IRS that your principal place of residence is elsewhere and there are a whole stack of tests that your residency must pass.
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