A Partnership involves two or more people who share the profits,or losses, of the business. It's just like a SoleProprietorship, except you need an EIN. Also, profits, losses,and liabilities are split between the partners.

A Corporation is a separate legal entity from the individualswho started it. It can be taxed and is legally liable for whatit does. The benefit of a corporation is that its corporatestatus does not hold the employees liable. The downside is thatit is expensive to start, and requires a lot of bookkeeping.

A combination of a Corporation and a Partnership is the LimitedLiability Company (LLC). The advantage is that the profits andlosses are passed to the owners without taxing the businessitself, and the owners are not personally liable. However, thereis no stock, fewer incentives, and loads of paperwork.

As you can see, there are pros and cons to each businessstructure. It is highly recommended that you talk to a localaccountant or lawyer as to which structure best fits your needs.

What other forms and taxes do I need to worry about? BusinessLicense There are many types of licenses, and even for an onlinebusiness you will probably need one to operate legally. If thebusiness is located within the city limits, then your licensecomes from the city. If you are outside the city limits, thelicense comes from the county.

Fictitious Business Name If your business uses a name other thanyour own, then it is required by the Trade Name Registration Actfor you to register the fictitious name (which is also known asD/B/A, doing business as). It verifies that you and yourbusiness are one and the same. Depending on where you live, theform is usually filed at the county clerk's office.

Trademarks Domain names are a large part of your internetbusiness, and protecting it is essential. A trademark identifiesthe source of goods or services to the consumers. You cannotregister a domain name by itself, because just the name ismerely an address. However, your online business name can betrademarked if it provides a service to consumers, such asbooking flights, research on parenting, comparing insurancecompanies, etc. If you create items that you sell on yourwebsite, those product names can be trademarked. To learn moreabout trademark rules, go to www.uspto.gov.

Sales Tax Each state issues a sales and use tax which applies tothe use or consumption of tangible personal property and certainservices. If you sell something tangible, tax must be collected.However, if you sell an e-book, it might not have to be. A salestax number is required for each business before opening, and therules are different in every state, so this is something youneed to look into. I live in Missouri, and according to Missouristate law, I am subject to sales tax if the product's shippingand delivery points are both in Missouri. However, your statemight be different.

Self-Employment Tax Self-employment tax (SE tax) is forindividuals who work for themselves, and is a social securityand Medicare tax. You must pay the SE tax and file Schedule SEon Form 1040 if your net earnings from self-employment equaledor exceeded $400. To figure your net earnings, multiply yourtotal earnings subject to the SE tax by 92.35%. You will betaxed 15.3% on the net earnings.

What can I deduct? As far as deducting part of your home as abusiness expense, that only works if that part of your home isexclusively for business. If your computer and desk are in theliving room, that square footage cannot be deducted. To deduct apart of your home, it must meet one of the following criteria:1.Your principal place of business 2.You meet or deal withcustomers or clients in this area as a normal part of yourbusiness. 3.An unattached, separate structure used in connectionwith your business.

There are also a few other small requirements. The onlyexceptions are for day-care providers and the storage ofinventory or product samples used in your business. If you buy acomputer and over 50% of its use is for the business, you candeduct the depreciation on the portion of your computer used forbusiness as a miscellaneous itemized deduction. Expenses such asweb hosting, domain registration, etc, can all be deducted asbusiness expenses.

Some rules vary from state to state and even county to county,so be sure to stop by your local county clerk's office or talkto other home businesses in the area to ensure everything iscompliant. For more information on rules and taxes, go towww.irs.gov and www.ftc.gov.

About the author:Brian Roe publishes Profitable Net Marketing, an informativenewsletter full of helpful hints, opportunities, and time savingtools to help start and support YOUR home business. For a FREEsubscription check out http://www.profitablenetmarketing.com