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macobo
01-18-2009, 02:20 AM
Hello,

I have been tinkering with a website idea where ad revenues are shared with the content contributors.

Does anyone have experience or guidance on the pitfalls and whether I would be taxed on revenue before or after making "payouts"?

Thank you.

Chris
01-18-2009, 06:48 AM
IT depends on how you set it up.

The most common way is to have the contributors supply you with their adcode (such as from Google) and you just implement it. That way, you actually pay them nothing, Google pays them. It makes your accounting really simple.

If you were to actually collect money and then pay them, all the money you collect is income you must declare, all the money you pay out is expenses you declare. Assuming you are in the US if you pay out more than $600 to a non-corporation in a calendar year you have to report it to the IRS (you need a W9 form on file for the person) and you need to send that person a 1099.
Much more work.