Does he need an LLC?

[pluto]

I've always been able to house my projects and websites under my agency and haven't thought too much of it.

A friend and I were jamming on some ideas recently. He's an experienced marketer but hasn't ever run his own site and wants to dabble with his spare cash/time. He's considering buying a super small site (I'm talking like pure starter site, doing $20-$100 a month) that he can experiment within his side time with his side cash.

Today he texted me. He's got a site in mind! Still doing his due diligence but he asked me a question I wasn't sure about so I thought I'd pass it to these forums.

Does he need to incorporate? Something like an LLC. For a site he'll be paying ~$1k for and making very little every month from, the yearly franchise tax fees and fees to incorporate are fairly high and would make anything at that scale not make any sense. But he's got a wife and kids so he can't really afford to get sued for everything either if he doesn't incorporate.

 

[JamaicanMoose]

What could he possibly get sued for? Well, unless he does something really, really stupid like says the way to cure cancer is to stick your hand in a high-speed blender and then someone actually does that. Aside from that, he'll get a cease and desist long before suing is remotely an option.

I run everything under an EIN and it works swimmingly.

 

[pluto]

I run everything under an EIN and it works swimmingly.

don't you need to incorporate something to get an EIN?

no idea -- my agency has been threatened with dumb seemingly automated legal threats before. nothing that ever materialized but there definitely seem to be trolls who make money off suing unwitting sites at scale

 

[Ryuzaki]

You ignore all threats of lawsuits. They're typically fishing to see who's gullible enough to get spooked and then pay out a settlement. "You used my image, but it's not worth me taking you to court, so maybe I can scare you."

He can operate as a sole proprietor, he just won't get the "limited liability" that the veil of an LLC or S-Corp might provide.

He doesn't need to spend additional money and make everything more complicated for a site he's paying $1k for that earns peanuts, you know. Wait until the downside outweighs the upside.

If you start getting paranoid, the next question becomes "do I need a trademark for every domain and brand I own?" and so forth about copyrights and everything else. Most of the law is already designed to issue and protect you in these scenarios.

 

[JamaicanMoose]

don't you need to incorporate something to get an EIN?

no idea -- my agency has been threatened with dumb seemingly automated legal threats before. nothing that ever materialized but there definitely seem to be trolls who make money off suing unwitting sites at scale

Nope, anyone can register for one - https://www.irs.gov/businesses/smal...-an-employer-identification-number-ein-online

Edit - side benefit is that most solo 401k providers require an EIN to setup the plan.