Topic: Information needed on Bitcoin business (Read 2586 times)

Be sure to read up on the concept of unlimited personal liability as it relates to a sole proprietorship.  You indicate you own your home.  Your home is now an asset of your business, and so is everything in it.  Your car, you bank accounts, any personal assets, TV, stereo, other property, real estate, stock bonds, mutual funds, anything in your safety deposit boxes, etc.   So say you host 10 rigs and someone breaks in and steals them.  Now lets say your insurance doesn't cover it and you can't pay out of pocket in full (asset rich but cash poor).  The owners can sue you personally in court and seize your assets (everything you own and even your future earnings) in order to secure their claim. 

Also be sure you understand the tax implications.  Say you make $50,000 profit the first year but being a smart business owner you decide not to spend it and keep it in the business to grow/expand the business.  As a sole proprietor the instant you earn the profit you incur tax liability.  The govt eats into your profits and there is no sheltering of taxes.  This makes it harder to grow and expand the company.  Even keeping profits as cash in a bank account to expand your working capital has the overhead of upfront taxes.  Granted you could cheat on your taxes but then all your personal assets become subject to seizure by the IRS.

Talked to a CPA about this last week (USA), and I'm going to operate as a sole proprietor.  There are very few fees in my state for this; the only major one is personal property tax, which is about 3% of the depreciated value of any personally owned business hardware if the total amount owned is over $10K.  Under $10K and you're exempt.  The rate of depreciation is 20% a year I think, with a 25% final value minimum.  For investors (I only have one potential), I'm basically just working it like a hosting service.  If I host your hardware, you chip in for my expenses/power/etc. and I take a small fee of what's left, then you get the rest.  There's no protection for investors this way though, so it's more risky than if I were incorporated.  It's the same as a personal loan with no promise to pay back.  Most people won't invest in something like that, and I'm fine with that (less work for me).

Running the business out of my house allows me to deduct a major portion of my home expenses (insurance, property tax, HOA fee, power, possibly internet, etc.).  The only downside is if I sell the house without shutting down the business for 2 years, and I get a capital gain, I have to pay capital gain taxes on the portion of the house used for business (there's no $500K exemption on that part).  Something to keep in mind if you plan on selling your house..

Omnicoins Pty Ltd is a registered company incorporated and operating out of the Australian Capital Territory. We decided to incorporate mainly to encourage users to trust us over the guys operating out of mum's basement. We see incorporation as an important step that bitcoin businesses will need to take in order for bitcoin to achieve wider adoption, and to be taken seriously in the business world.

This is a very important point which more people need to understand. The level of accountability required to be reliable for a business sitting on loads of people's money (long-term borrowers, exchanges, ...) is leaps and bounds above what is required for a business that settles transactions quickly.

well, you have to see it from different angles - for example, my average purchase volume per customer is below $10 per month. My Orders are filled instantly. If I started to scam/screw people, I'd gain like 10 bucks, but people would also start warning others about me, which would mean that I'd lose most of my business because I wanted to make a $10 profit... So despite me being anonymous, it's against my interest to screw people over. I'd lose way more in the mid/longterm, than I could gain in a short term.So yes, anonymity and reliability can go hand in hand - and if people dont trust us,(which we encourage btw, because no one should trust someone else he doesnt know or cannot get a hand on) we always allow for escrowed transactions using bitmit.net.

This is a Graet initiative. (If you'll excuse the pun.)

I will feel much more comfortable doing business with your real, registered businesses that are operated by real, known people. I will do my business with you, much in preference to those who would insist on staying anonymous and untraceable -- as any sufficiently anonymous business is liable to close shop at their whim, and disappear at any moment -- along with whatever claims are being held against them.

If I have any choice in the matter, you will be the ones to claim my coin. Legitimacy through accountability is clearly needed for the Bitcoin business world to grow and and expand beyond whatever small commitments "one can afford to lose" at any time. Hopefully, as people are starting to realize this, you guys will win, and the scammers will simply leave.

Thanks for doing this!

Bitcoil is a registered business, but not a company. A business because trying to do this under the radar isn't scalable; not a company because at this point it's too much overhead for too little benefit.

While formally the business is about a Bitcoin exchange service, all my other activities are indirectly encompassed under its umbrella.

All Things Luxury is a registered business. We have been since 2010. Just recently started accepting bitcoins as an additional form of payment. We are loving it so far, and have received some strong support from the community already.

If you live in the U.S. and sell anything, with a income of more then 6k you are required to claim taxes on it. Below 6k is considered a "hobby business". It makes it easy to claim a tax deduction, bought equipment? why not get some of the money back at the end of the year?

I am sure that there are plenty of others like me whose business is so small that it makes no sense to go the registered route.  Well that and I don't deal in fiat of any sort.

That might be right for some businesses. My customers are probably NOT law-abiding citizens in their country. That doesnt mean they're bad people, on my standpoint it's just the law that is wrong.
This is also the best reason to buy their products from me, since I wont ask questions, and they have the choice to get their products no questions asked, and with an untracable(if they do it right) source of money. Just because I stumbled upon this thread, I asked my lawyer what I'd need to do to my customers if I registered bit-host.tk as a legal business:
1 - Log their IP Address for up to 6 weeks
2 - Log their E-Mail Address as recipient(for tax stuff)
3 - ask them to provide an e-mail address even where none is needed
4 - Have an imprint, making my personal identity vulnerable to greedy lawyers
5 - Have an extra Button with the writing "Buy this now for money" or stuff
6 - keep records of the bitcoin addresses used
7 - drastically increase my prices, because the sources of my product would fall out
... some more nonsense stuff that'd turn a 2-step purchase process into a complicated adventure
However, since my profits keep below the reporting threshold, I dont really have to register a business yet. I'm still legal.

As for liabilities, which were listed as a pro-incorporation argument here, my business doesnt really have any risks. I have some measures in place to prevent loss, meaning that bitcoins never really touch my site, and I keep only reasonable stock amounts there. That combined with thoughtful programming should probably do the trick.

However I acknowledge that there's some different business models here, that make incorporation become a logical step. TangibleCryptography's business for example - with him being registered, we have at least some kind of insurance(no offense here, I know your feedback, I used your service, and I consider it trustworthy and legit) that he isnt another coin-exchanger kind of guy

My services (easywallet.org and localbitcoins.com) belong to a registered company in Finland, and we pay taxes etc. However revenue is so small, that it doesn't matter much, but anyway.

Although I'm considering moving the business elsewhere, since the goverment officials are not giving me much guidance how to pay those taxes and so on.

It matters when your business needs to be involved with non-bitcoin businesses, true, however with bitcoin only business you can still reach mass customers (limited by the bitcoin market of course) without being legal.

Because the majority of customers and businesses are law-abiding in their country.  If you want to reach a mass of customers, you play by the rules.

I already own one company and will be probably launch another for my upcoming bitcoin business, however the only reason I choose to do that is because I need to deal with non-bitcoin providers. I really don't have much choice, it's either that or nothing. I'm a strong believer in the counter-economy, the black market, agorist trade and will embrace and support those who take this route.

Why on earth would you want to regulate your otherwise free business through making a company subject to stupid laws, regulations, taxes and accounting obligations? (yeah yeah, you're still technically subject to them anyways, but isn't that the whole point of bitcoin? Having business freedom?)

If anything I think it will be easier for your government to shut you down if you're running a business. E-gold?

What part of NC you in? Im registered to take and collect taxes with the N.C.

If I do LLC. Do formal incorp it will be in Delaware.

CoinLab, Inc. is a registered Delaware Corp, which operates out of Seattle, WA.

Interesting question.
Planning on starting a btc project, don't know if it's advised to register or not.

Didnt register any business so far - for once because I'm not making enough profit/sales volume to have to register a business yet, and asides from that its a better idea to run it private - I simply couldnt provide a "no questions asked" business from my country. I'd have to log my customers IP addresses, and I'd have to keep their mail addresses, which conflicts with my idea of privacy, which is basically only keep what's needed, dont use cookies, delete stuff as soon as you dont need it any more.

exMULTI, Inc. is a registered, tax paying North Carolina corporation, solely dedicated to bitcoins.

One person company, too.  No shadow investors or mysterious step fathers involved, just me

Well how much better is it, really, do do business with people who avoid liability for their actions?

Seems like kids are the most responsible people, being responsible to their parents and other adults; adults less responsible maybe, then into corporations deliberately designed to let people avoid responsibility then at the top to the politicians who are not even liable for the lives they take by creating laws saying its ok to kill people, or to starve people to death, or whatever they heck else that they cannot be held liable for.

So while from a selfish personal perspective being totally un-liable sounds great, I am not so sure how helpful it really is to the consumers / customers?

-MarkM-

BitPay, Inc.  is a registered Delaware C Corp.

Tangible Cryptography LLC ("FastCash4Bitcoins", "Bitcoins Direct", "Cell Coin") is a registered Virginia Limited Liability Company.

The reason? Operating a business without creating a independent legal entity is just foolish/risky.  If nothing else the fact that a sole proprietorship has unlimited personal liability should be enough of a reason.

yes, that's why I asked how many are, and of those not could they give us their reasons

in #bitcoin-dev some discussion of the foundation is taking place

slush raised an interesting question - I would like to put it to the wider community

well, better question: How many bitcoin businesses are *real* companies?


I registered my pool as a business shortly after opening in June 2011.

I figured it would be harder for my government to shut the pool down if it was legally registered and following regulations/tax laws etc than operating unregistered and avoiding regulation and tax.
I also thought it could be seen as a commitment to continue - it takes time and money to properly set up a business and more time and money to wind it up (in my country anyway)...

So I'd be interested to hear from Bitcoin business owners, tell us if you are or are not a registered business and why you have chosen your course.
For unregistered businesses do you have plans  on how to continue if you're government does take a hard look at you and your operations.

Bitcoin users can have a say on whether they prefer to deal with a registered business or an anonymous nick - or just don't care

Would prefer if thread could stay on topic

Thanks
Graeme Tee
Ozcoin pooled Mining Pty Ltd
ACN: 152 509 272