PayPal me my taxes.

January 16, 2005 1:14 PM

I am running a free Web-based service for friends and acquaintances. Lately, the volume on this service has been growing greatly. The next step is to move the service to a professional host. I am thinking of putting a paypal donation button on the site to help pay for it. Are there any legal or tax issues I need to worry about? Do I need a business license? What if I want to start selling Cafe Press items or running Google ads? I am located in the USA.
posted by Orkboi to Law & Government (5 answers total)

In theory, probably. In practice, most people don't pay any attention to that sort of thing. If you get thousands and thousands in donations then you might want to think again, but until then, I think you'll be fine.
posted by reklaw at 1:31 PM on January 16, 2005

What is the site? Just curious.
posted by banished at 1:38 PM on January 16, 2005

Unless my accountants have lead me wrong, all that money is treated just like any other taxed extra income (1099). Once a place like Google pays you more than $600 in a year, they'll send you a 1099, which you'll owe taxes (state and federal, social security, medicare, etc) on.
posted by mathowie at 1:48 PM on January 16, 2005

Really, I wouldn't worry much about it however if you wanted to be totally legit you should tell the IRS how much you made.
posted by pwb503 at 1:59 PM on January 16, 2005

The government also gets a copy of those 1099's, right? So that would seem to be a good guideline on what you'll get caught for not reporting.
posted by smackfu at 3:44 PM on January 16, 2005