When To Start Your Own Affiliate Business

So you’ve been working really hard and started to make money online.  Now what?   Depending on how much money you are making, the answer could vary, but I recommend you at least consider starting a formalized business and operating under that business name.

What does this mean exactly? In my situation, for many months now I’ve been pulling in $1,000 or more from my online activities.  This income consists of a bunch of different sources with the primary income coming from affiliate marketing, but I also get a portion of it from domain sales and blogging advertisements/AdSense.   When I would get paid each month, I would just send that money over to my checking account and pay bills or drop some into savings, etc.   Sound familiar?

If you are making under $500.00 a month, this probably isn’t for you, but once you start making more than that, it is my belief that you should at least consider moving your activities over to a formalized business.

Should you decide to at least looking into starting a business, you’ll probably be trying to choose between an LLC (limited liability company) and running your business as a sole proprietorship.   Both types have advantages, but to start I recommend most people go with the sole proprietorship because they are easier to setup and you don’t have to completely separate your business assets/debts from personal assets/debts.   The one exception to that rule is domainers who run a signfiicant legal risk due to owning domains with possible trademark violations.  When your domain portfolios value gets into the 5 figure our higher range it is probably a good time to go with an LLC.  Operating under an LLC requires complete seperation from personal and business, so it requires a lot more paperwork, more accounts to manage, etc.   But the significant reduction in risk makes it more than worth it.

Edit: The day after I posted this, Jonathan Volk wrote a very detailed article about finding the best corporate structure which I think our readers will enjoy.

Why Operate Under a Business Name?

To be honest, there are a LOT of advantages to this and very few disadvantages in my opinion.  For the purposes of this post, lets look at the advantages of a sole properietorship:

• Tax Deductions - This is probably the most important reason.   I know my business expenses (domain renewals, advertising costs, PPC advertising) were going up as my income went up, and now that I am operating under a business name, I am able to deduct these things come tax time.   Before I was paying taxes on my full online income without deducting the expenses I have to run the business.   If you go the route of a sole proprietorship, you are also able to find a lot of additional deductions once you’ve made the switch, such as cell phone costs (if your domains are registered under that phone number), buying new desktop/laptop computers and equipment, etc.  If you aren’t sure what qualifies, you’ll want to consult a qualified accountant.
• Tax Identification Number (TID) - When you operate under a business name, you can use a TID instead of your social security number when you sign up with all of these companies.  This is more secure for you personally and really convenient.
• Better Accounting - Having a separate Paypal account, separate checking, savings, and credit card all make it much easier to track income/expenses and figure out exactly how much you truly are making each month after taking out your expenses.   This will also help you figure out how much money to put aside for tax time!
• More professional appearance - If you are buying advertising from someone, would you rather buy from Joe Blue or Blue Media?   Which one sounds more professional?  Probably a bad example, but you get the idea!
• Business Cards - This isn’t necessarily needed for people making money online unless you attend a lot of events, but it is nice to have the option available.

Introducing Apricot Media

I guess I haven’t really mentioned it yet here, but it obviously fits with the theme of this post so I will go ahead and make the official announcement.   About a month ago I finally finished making the complete transition over to my business name Apricot Media, and I am already extremely glad that I did.   Things have really gone great so far!   I finished setting up the domain awhile ago (though it is more of a splash page right now) and with the help of my friend Mark, I was able to get a great logo as well, which can also be used for business cards, fax coversheets, or whatever I want to use it on.   More importantly, I have a professional “media” email address that I can use to conduct business under.

RIght now, Apricot Media is more of a name than an internet presence, but remember that it is CRUCIAL to own the dot com version of your business name before you launch your business.  You will want to secure the dot com domain name before you pick your business name, even if you aren’t using it right away.  That is a big reason why when I was able to successfully acquire this incredible multi-thousand dollar domain name, I decided to use it as my business name (after doing a trademark search to verify there wouldn’t be issues there).

One of the great things about the internet is all of the options you have available to you, so I hope everyone is at least considering setting themselves up for success over time.   Have you considered converting to a formalized business?