Teachers and users can be located anywhere. Classes are going to be provided online so for the first two years there will be no office needed (no physical location, no employees). I see there are many options to save on corporate tax within the US (Delaware, Nevada). Going a step further, there are many offshore options with no corporate tax or distribution tax on profits (Bahamas, CI, Belize). Whether I incorporate domestically or offshore I am fine with claiming the profits earned at federal, state and local level when I file my personal tax return. I will also be fine with paying for all administrative services handling the corporate account overseas. What I am trying to save, however, are corporate taxes and taxes on distributions/profits. Thank you for your time.
Consider forming a limited liability company. This can be a pass-through entity for the purpose of federal income taxes. And most states will also treat it as a pass-through entity for tax purposes.
Properly formed and managed, there would be little or no income tax on the entity level.
You need to make sure that you are not over-complicating things here to a point whereby the administrative and legal costs begin to far out-weigh any gain as well.
An LLC would be a good option or in the event you anticipate that your revenues will greatly exceed that which you would otherwise pay yourself a reasonable salary to operate then an s-corp may make sense. An LLC is further beneficial because it has a check-the-box tax election so you can always change the way it is taxed as things progress. I will link you to a brief overview of entity types below that you may find helpful.
If all the business activity takes place in NY, that is, this is where you actually run and operate the business then the entity should be either domiciled here or at least qualified here as a foreign qualification. For example, does the business boasts a NY address? Is NY the jurisdiction where you would likely be sued? Would you look to the NY courts if you needed access to the legal system?
I suggest that you reach out to a lawyer (or several) of your choosing for a free phone consultation and get some specific insights before you proceed.
DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed with the law firm of Natoli-Lapin, LLC on the basis of this posting.
Are You Planning on Opening a New E-Commerce Website?
There is much you need to know as you begin your new business. I suggest you do not attempt to write your own legal policies. This is not where your training and background lie, and though you are probably as smart as an attorney, you do not have their experience.
Below is a checklist for legal issues I use for new e-commerce clients.
1. Business Model – Is your idea viable as a web based business?
2. Business entity - Are you going to be a C corp, a sub-S, an LLC or a sole proprietorship?
3. Terms of Service - This is your contract with your visitors and is the most important item for any e-commerce site. A little work here brings big dividends in the future.
5. FTC guidelines - The FTC has been regulating business advertising for almost a century. All of their advertising guidelines apply to e-commerce sites.
6. Domain Name issues? Is your name available. Can you create a Trademark?
7. Trademark - Do you have a brand name free from conflict? Should you start with just common law rights? Should you register the mark, and when?
8. Copyright - If it is on the web, it already belongs to somebody. Did you buy a license for the images you are using?
9. Do you need a DMCA policy?
10. Web Site security issues?
11. Do you need and have an EIN? You can get that for free.
12. Do you need an arbitration clause?
13. Do you have employees? - If so you need written policies regarding their authority and use of the internet.
14. Do you know the difference between a "browser wrap" and a "click wrap" and which do you need?
15. Are you abiding by the Child's Online Privacy Protection Act (COPPA)rules?
When I discuss this list with clients other issues arise. Finally, I always discuss with my clients their need for good accounting services. An accountant's advice as you start up can save you many dollars in tax that you might not save if you wait to speak to an accountant until your first tax return is due.
I hope this list will give you pause to think about those issues for which you might need to seek professional advice.
You may want to discuss your situation with a lawyer in more detail. Most lawyers on Avvo offer a free phone consultation.
This post is provided for general informational purposes only and is not intended to be legal advice specific to you. This general information is not a substitute for the advice of an attorney in your jurisdiction. The attorney client relationship is not established by this post.