Kindle Publishing Q&A – Shall I Open a LLC For My Business? Is The Taxman After Me?
This question comes out a lot. Students are afraid of legal repercussions as soon as they make $1 online. This is silly. They also immediately want to create their LLC in order to give their business a legal structure. It also seems to me that everybody is crazy about paying taxes on money they’re not earning.
Let’s clarify a few things.
1) Yes, after a certain point you should totally set up an LLC and be legit with your taxes. This varies profoundly from country to country. Students often times ask me what they should do with their taxes and my answer won’t change: ask your CPA. Possibly, an international one. A US citizen has to fulfil certain obligations which are simply not there for somebody who lives in Hong Kong.
Where you live matters, where you open your LLC matters, where your money comes from matters. You have just about thousands of combinations of this. You may be an American with an LLC in Dubai and make your money in France. This situation is radically different from a person from the Cayman Islands who has a company in the Cook Island that makes his money in the US. Obviously, with Kindle Publishing, you make your money in the US (did you know this??). But each situation is different.
The important point to understand is that nobody is after you and you should only create your LLC when you’re starting earning some moderately serious money on your Kindle Business. Usually, countries allow you to earn somebody as a sole individual and then you can create your LLC. Be sure to consult a CPA but don’t have anxiety attacks about you go to jail if you’re 1 month late in your LLC set up.
Money first, LLC later.
2) The taxman is not after you. Yes, there are some pretty aggressive countries in regard to taxes but, I mean, you cannot in any way think that $1,000 a month will land you in jail. It won’t. Again, I totally advise you to be legal and legit about your taxes and to not do anything stupid but living your life thinking that if you make a $500 mistake then you go to jail is totally unhealthy.
Think about making money first, then the LLC will be a natural progression. You don’t want to have things in your name: you want to detach yourself from your business. But business means you’re making money, not that you’re trying to launch it.
Usually, with business entities come taxes and paying taxes means you have less money.
Start paying them when you’re sure you can survive.
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