Do I Need a Business License / Non-Profit?? (fee, sales, attorney)

[pallidamors]

Hi. I'm looking for some advice on my situation. I am clueless, and basically, I need somebody to tell me what to do

I run a small website that charges a membership fee for access. Members who pay the fee get access to a database of rare photographs that I collect. It's a hobby of mine. I purchase these photos, and do not take them myself.

I make around $10,000 a year in memberships, +/- $2,000.

Every cent of the money I make from memberships goes back into purchasing more photographs, which are put on the site. I spend probably $30,000/year on photographs, so the purpose of the site obviously isn't to profit, it's more to help cover some of my costs and at the same time, share the photos with others who are interested. I have no employees.

My question is, do I need a business license? Could I qualify as a non-profit entity? There is an educational aspect to the site, it's sort of an online museum. I want to do everything that is required by law, and everything that is required to run a legit website, but I really don't know where to start, and what is even required of me in this situation.

Any advice or other tips? Something to get me pointed in the right direction? Thanks.

[sunsprit]

On the face of it from what you describe, you have a hobby and not a real business.

Your state and local Dept's of Revenue will be the best folk to answer your question about a sales tax license. But if you aren't using the tax license to obtain in the trade discounts or have a taxable product for which you need to collect and report sales taxes, it would seem unlikely that a sales tax license would be of any benefit at this point in time.

Taking it to a non-profit level would probably require you to use the "museum" aspects to qualify for a 501.c.3 operation.

Your best advice at this point would be to contact your accountant who can advise you what it will cost it dollars and time to comply with a non-profit filing and what, if any, real benefits would result. It's not as simple as just doing the filing, there are ongoing costs of compliance with record keeping, accounting and filing returns.

[WyoNewk]

There's no federal "business license", but there may well be a requirement for one in your state and/or community. I'd suggest that you ask a local attorney, and while you're at it, ask about state and federal taxes and if what you're doing could/should be set up as a non-profit agency.

I think you could get into trouble with taxes if you're not careful, state and local sales taxes and state and federal income taxes. The fact that you're reinvesting your income into more pictures does not mean there's no income nor that you needn't report the income.

Since you didn't say if you're also purchasing the copyrights to these pictures, you might also want to check with your attorney about whether or not what you're doing is legal if you haven't. Owning a picture doesn't mean you have the right to publish it or make money off of it; you may also need to own the copyright publication rights to it, depending on a number of things. Copyright laws can get pretty complicated, so you or your counsel might want to consult with a copyright attorney.