I have effectively started a small business. The business is an online venture and has already generated a small amount of money through donations/etc. I am currently considering if I want to go further with this venture, or just let it sit. One of my concerns is that if I start attempting to monetize it (taking payments for services, advertising revenue, more donations, etc) I might start having legal issues with having to claim for taxes/etc. I should also clarify, basically all of the money would go to running costs, expanding the project, etc.
I do not expect a high income from this, but I am not sure if I would have to claim taxes on it (e.g. less than $10,000 a year). I am also curious if I spend all the money investing further into the venture (e.g. if I made $1000 if I spent all of that money furthering the project) would I/should I claim it?
Here is what I have considered:
- Do nothing, continue the project as I have been (not claiming any taxes, incorporating, etc. Keep extensive records to prove I am not taking any income from this. If it takes off, eventually start using this as a primary income source (at which point start a real business).
- Register for a small business (this would likely be a Sole proprietorship).
2 & 3 have me concerned since I expect it comes with a number of fees, responsibilities, etc. This seems out of proportion considering I doubt I would be making more than enough to simply fund the project.
In addition I should mention that I make more then the minimum un-taxed amount (as I also have a regular job) so simply claiming it on my personal taxes is not preferred (unless you can give a good reason for doing such).