Income Tax

As of Jan 1, 2011 The IRS is now requiring your credit card processor, including PayPal and the like, to report to them how much money you're receiving by accepting credit card, etc. payments they've processed for your business. The figure the IRS asked for is the gross, unadjusted amount, so if you processed $100 in gross receipts, that's the number they are going to send to the IRS, even if you had a $20 chargeback and $15 in fees. At the end of the year the processor will send you a 1099 showing you the total dollar amount that you received through them and that they reported to the IRS.

The IRS has recently made it very clear that the owner(s) of an LLC have to file an income tax return in the USA. This applies to LLCs formed in every State, not just in Delaware, so you can't form in another State thinking this doesn't apply to you.

From the IRS website: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
"The federal government does not recognize an LLC as a classification for federal tax purposes. An LLC business entity must file as a corporation, partnership or sole proprietorship tax return."

What this means to you: