WARNING: this is a pretty long-winded post.
This in reference to a post provided by Kross, but instead of replying in his thread, I thought it might be helpful for others to see it in general.
Quote:
Originally posted by Kross
Hey all, I have a quick question and im sure all of you could answer it. Acouple of people I know want to make an adult site. There will be a total amount of 4 people. Im not sure what legal stuff they would have to do? Partnership ? Anyplace online that they could do it? Thanks
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Ok, heres a fairly knowledgable breakdown of how you might want to go with your business...
Sole Proprietership
# of owners:
1
How to Form:
Just do it.
Level of Personal Liability:
Unlimited
Tax Consequences:
Owner Pays
Ability to transfer ownership:
totally transferrable
Partnership
# of owners:
2 or more
How to Form:
verbal or written agreement
Level of Personal Liability:
unlimited for general partners, limited partners can lose up to the amount they've invested
Tax Consequences:
individual partners must pay
Ability to transfer ownership:
may need consent of other partners
"C" Corporation
# of owners:
unlimited
How to Form:
follow rules set by state law
Level of Personal Liability:
only the amount you've invested
Tax Consequences:
corporation pays on earnings; shareholders pay on dividends
Ability to transfer ownership:
totally transferable
"S" Corporation
# of owners:
up to 35, must be U.S. citizens or residents
How to Form:
follow rules set by state laws and the IRS
Level of Personal Liability:
Only the amount you've invested
Tax Consequences:
individual shareholders pay
Ability to transfer ownership:
May be limited in order to preserve "S" status
Limited Liability Corporation (LLC)
# of owners:
2 or more
How to Form:
follow rules set by state law
Level of Personal Liability:
only the amount you've invested
Tax Consequences:
individual owners pay
Ability to transfer ownership:
generally need consent of all owners
Generally, the Sole proprietership is ALWAYS the best way to go; YOU have control of your business and YOU decide which way it goes. However, if you need additional people to get started, usually the best way to go is a Partnership.
Both are easy to set up--You don't have to file any special forms or pay any fees to start. Additionally, there are'nt any special rules governing your operation.
I won't even go into corporations, the odds of anyone going public with an adult site are pretty slim. Besides, issuing stock options and going public are both very confusing and time and money intensive, most webmasters are filled to the brim with responsibility and cannot afford this investment. For those that are interested, however, you can refer to the link below for more info.
THE best way to go if you are afraid of risk and are using invested dollars, is a Limited Liability Corporation (LLC).
You can have Limited Liability Partnerships, as well, and this is probably the smartest way to go. LLC's are great, because you get the same protection that a corporation gets (as far as owner liability is concerned) but the simplicity and flexibility offer a helluva advantage over corps.
You can refer to
www.nolo.com for more information. If you have any questions, you can contact me.
ICQ: 163385497
Thanks for listening.
Also: Please keep some sort of thread going for awhile on this post....I think this is probably pretty useful for some people.