Business and Paypal

[DNQuest.com]

Ok, in another thread, something hit me and I did not know the answer so I decided to start a new thread.

Speaking for the US only, anyone can start a business with only checking account with your business name on the account. You simply go to a bank, open an account and call yourself a business. This is called a Sole Proprietorship which all revenue and expenses are submitted in Section C on your tax return.

The benefit of having a company is clear, You can claim all your expenses in the course of doing business. While if domains are a hobby only, you are limited in expenses you can claim and subject to capital gains.

With that said, would Paypal be concidered a checking account in which you can claim you are running a business? I know most everyone of us have a Paypal account. So people who have been buying/selling domains using Paypal can show they are actually running a business. Does anyone have educated knowledge about this?

Please, no specualtion ot opinions, I am looking for people who have first hand knowledge. This could be useful for domainers who are starting out or who only do domains as a hobby.

 

[labrocca]

Most states require you to get a sole proprietor license. You will need that to open a business bank account. Paypal is NOT a bank. I have a verified business account with them but I don't recall what forms I sent them for that..as it was years ago.

I was a sole proprietor back in 1995 but in 1999 I incorporated.

I think if you are only running with a paypal account technically it is not a business. Of course I would love to hear from an accountant on this myself.

 

[DNQuest.com]

I have had businesses in both Ohio and Maryland, and neither states requires a license. There are business where you need to be licensed and you need a sales tax license if you are in retail. Most of us here are puter geeks (programmers, web masters, domain speculators, consultants) and there is no licnese requirements for that (unless you are selling software/hardware, then you need a slaes tax license).

I have had 2 businesses and I have yet to need to obtain any licese at all.

I do know that when I take money out of Paypal, I select it as a checking account.