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  • Taking money on the Web site

    Hi. I am creating a Web application. I'll take money for offered service using PayPal. The question is, do I need to establish the company now or may I collect fees not paying any taxes to the government?
    Best regards

  • #2
    In most countries/states you do not need to be a registered company to take money for services - however, you will always be liable for tax on the income.

    In fact, in most places, you will be liable for standard income tax just like any other earning you get (salary/wage/interest).

    Setting up a company, on the other hand, can count as an investment (can be a tax break on what you invest), the company income is only liable for the local business rate on its income (typically a lower rate than income tax, and typically calculated on net income, ie, after expenses). However, any money that your company then pays you (either as a 'salary' or as a 'dividend') is liable to standard income tax...

    Another advantage to setting up a company is that you can limit your liability if anyone tries to sue you for any possible harm that your service may cause (however unlikely you think that may be, it is always a risk).

    Caveat

    Tax and corporation laws are geographically specific (I'm in Australia, and we have different rules to the UK and US) - you need to talk to a local expert. Most places have government provided business agencies which can provide information and assistance to you for free (or very low cost). Eventually, though, you may need to talk to a lawyer or accountant.

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