Creating a legitimate "business" in SL to make RL money...

Back of a used envelope with coffee stains on it?

Why are you looking through my desk?

While there is no business license at the national level, if you have employees, or are involved in certain types of commerce, you are required to file for an employer tax ID number.

no, no...there are lots of allowable business deductions. UNLESS you declare it as "hobby income". In which case, you cannot take any of the business deductions, or offset the income with expenses.

Let's take Sam. Sam has a small business that makes $10,000 in sales. He also has expenses of $4,000 and business deductions of $2,000. He is taxed on $4,000. But the downside is that he has to keep records, obtain any needed business permits, and in general operate his activity *as* a business, with the intent to make a profit.

Then there's Jim. Jim also sells items worth $10,000, He has expenses of $4,000, and can't take any deductions for mileage, home office, etc. But Jim is not set up as a business. He's just pursuing a hobby, that happens to make some money on the side. Jim is taxed on $10,000.

Oddly enough, there are many times, especially when the levels of income are very low, or sporadic, when it just doesn't make sense to jump through all the hoops of starting and operating a business just to take off the expenses on your taxes.

940 is for federal unemployment
941 is for your quarterly returns.

Sorry..forgot to address that.

If you are dirt poor and can prove it, or have a corporation, tax breaks abound!

The corporation can get breaks that an individual can't (I'm talking about legitimate breaks, not 'passing yourself off' as a corporation though some do that too).

But if you are a Regular Joe, you are gonna pay. And pay and pay and pay.

The upside to being in business is that you have a shot at breaking through and making a lot of money that no mere employee could ever dream of making, outside of professional sports or rap videos.

The downside is that you have a good shot at losing your shirt and ending up on the street, too...

We don't have to pay VAT!!

Depends which state you live in. Plenty of states have a sales tax which is basically VAT.

Truthfully I don't think its very relevant because the majority of us don't make anything or we spend more on business and land then we earn.
Here is example of my own year which probably is common.
I spent on average first 6 months equivelent of 200 usd a month on land purchases, dues and tier.
I spent around the total counting tier. land and membership equivelent around 554000L or 2000 in one year.
I earned counting gifts and what not I earned maybe 1/4 of what I spent.
If this was cashed out and real money I still be living below poverty level and I wouldn't be able to afford to even pay a accountant for 5 mins.
If I made another 400 usd it would go tier not be cashed out. If I got 1000 usd I might cash out but it would directly go equipment cost.
I still would be below poverty level.
IRS would only want to know if I earned over 4k a quarter net or at least it seems that way anything less seems bit of waste of time in my humble opnion.
Any IRS agent who want to throw some one in jail who earns under 24k gross a year for not reporting taxes I think is nuts especially when the average rent in my area is 1000 usd a month in real life.
Tax breaks usually only apply to those making six figures a year.

In California they don't tax you on food bought in a grocery store. Meat. Bread. Veggies. Etc.

As complicated as this thread tries to present it all.

Keep in mind for the vast majority of SL business owners they will never make more than a few hundred dollars a year. Less than many people make selling their old junk on Ebay.

In the UK all you have to do is call up, say "I'm self employed." They then ask what sort of thing you do and the name of the company (if you want). They then send you a tax form in April that doesn't need to be filled out til Sept 30th (if you want them to figure out how much you owe) or Jan 30 (if you want to figure it out for yourself).

From what I remember when I lived in the states, I never had to file any extra paperwork when I was self employed. I just had to pay a LOT more in taxes then when I had a salary job.

How professionally you treat your SL business experience may very well factor in to how able you are to defend your IP rights. If most content creators don't take their businesses seriously enough to actually treat them as such...just how seriously is a court supposed to take them when it comes time to consider any damage caused by an alleged IP violation?

If you want business in SL...treat it as a business. If not...it's just a hobby, or a game.

For those far less than 1% making enough to even worry about it, you have a point.

I don't even make enough that my IP rights would be worth going to small claims court over. And I make more that the majority of those in business. (or used to anyhow)

Geeesh, I guess no one does it for love anymore huh?

Here's the terrible kicker.

You CAN'T go to small claims court over your IP rights. DMCA protection is a federal matter. You've got to take it up in a federal court. Cha-CHING.

And it only gets better. The longer you allow violations to occur without taking action...the less standing your claim possesses in court. Especially after a precedent-setting case has been decided...which will happen in a few months, if certain parties don't agree to a settlement.

I think you are making the reverse of your stated point -

all this basically just raises the threshold of amount you'd have to make before you'd even care about all this nonsense.

So you are either trying reverse psychology, you are trolling, or you are making no sense by bringing all this junk up with regards to most business owners in Second Life.

Someone posted it a maybe six months ago when the economy was actually better, the number of people in second life who make more than $50 US a month is extremely small.

And that was before they outlawed gambling and all these "banks" collapsed.

That is the kicker for sure.

What an interesting thread.

Sort of a new standard of how to forget SL business. A new paradigm. A collective awakening. Rage against the machine. A writers strike. The fantasy that was SL was a fantasy. The cyber Catch-22. The infiltration by RL. The splattered Internet Spam in 3D. The commercial spam farms. yarrrrrggggggg. Register with External Forces.

Whats this bill from the City? They want 3 grand?!! New crackdown policy according to CA codes. But they will take much less after you sign up with them and get a city license for your Avatar. Parallel universes colliding over the almighty dollar.


So now that residents have additional expenses, LL should be paying us, to play SL, we are donating our computer time and hard drive, for their project. 4 cents per prim we sell....wait... make that 8 cents. Why do we have to pay to use the prims or sims? LL should be paying residents for making content. or refuse to make any more content.. Strike! It's all Rl now.

After all they are printing the money. They can afford to pay us.

Well, in response to the original post, I agree and disagree.

People can start up "businsesses" here without going through RL paperwork and licenses, because most of those people will not even make anything worth cashing out.

If you make X amount of money, you need to file tax on it by law. If you make under that mark, its considered a hobby and you`re not obligated to pay tax. (I say X amount because i`m not sure if it`s different for every state).

Like I said, most people who are doing business in SL do not make anything worth cashing out, and if they do, it could easily be considered "hobby money".

For those who are over the mark, they do need to obtain a businsess license and do their taxes. And for their own benefit, they should TM their business name.

Or an Avatar rating at least a 12 on the trout scale...............

I'll marry her

Hey that reminds me - someone owes me a bribe!! You know who you are.

haha that made me laugh but yeah its an important first step

Argent just has a mad-on about anyone that actually defends their IP rights.

If you are serious about your business, treat it like a business. If you are in some hippy dippy quasi-socialist fantasy about use of stuff other people make and sell, then don't treat it like a business. It's very simple.

I'm not an sl millionaire by a longshot but what I do make especialy the stuff that takes me ages and ages to complete and fries my brain in the process I will defend because to me its art even if it makes me no more then a few pennies. Wanna make something do it yourself dont go steal mine...