Jim Wilson wrote:
You see, at least on the federal level you can collect quite a large sum of money as "gifts" before you have to put anything on your tax return.
I am not intimately familiar with U.S. tax laws, but I would be very surprised if the IRS allowed Curt to count advertising revenue as a gift. I will admit that I do not know what the case would be for voluntary donations, so a PayPal donation button might be an OK choice.
So in a nutshell my advice is: (1) Think about the project image issue. (2) Don't be afraid of small business. People do it every day. It doesn't have to be complex or "commercial".
The overhead is not horrible, but it's important not to underestimate it -- you'll be hard-pressed to find any small business owner who was not surprised by the amount of non-billable work involved and dismayed by the number of regs to learn (and I understand that the U.S. is much worse than Canada in this regard). I've set up three corporations and have been running my own small business since 1998, and the extra time required is by no means a full-time or even half-time job, but it is there. I've never done anything disasterous, but I did have to write off USD 18K in accounts receivable from a customer that went bankrupt, and I lost another USD 9K to the government early on because of tax laws I didn't fully understand yet (I wrote myself a bonus cheque a couple of months later than I was supposed to, and ended up with a mini-audit from the province of Ontario and USD 1.5K in accounting fees on top of the tax penalty).
I don't regret going into business for myself, but it's a big commitment, not a side project. If someone already has too little time available, as is Curt's problem, spending even more time managing customer relationships, sending out invoices, chasing down bad accounts, filling in tax forms, etc. might not be the best choice, especially if the potential revenue is (as I suspect) a couple of thousand dollars per year at best.
P.S. Note, I am not a CPA or a lawyer, but I've been intimately involved in starting up corporations (one was my own) and have filed a few schedule C forms over the years. Talk to a CPA who understands that you want to "keep it simple". Generally speaking business lawyers don't know what "keep it simple" means (or rather they recognize that "simple" != "legal fees").
The problem is that the CPA's fee alone will probably represent a significant percentage of the potential annual revenue.
All the best,
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