New Affiliate Site, questions about US legality

[v2p]

My partner and I have been poker coaches for quite some time. Recently we have started expanding into the affiliate side of the business. At first the payments were rather small and we had little to worry about. However, the payments are now approaching several thousand dollars a month and are growing every month.

I did some google searching, and I could not find an answer on the legality of affiliate advertising in the US when advertising online poker. I'd like to hear from anyone running a site owned in the US, and properly reporting the income. Are you incorporated as an LLC, s-corp, etc? Has anyone spoken with a lawyer or CPA regarding the income?

We plan on meeting with a CPA soon to get some things sorted out, but I wanted to do a bit a research first. Any insight you may have in this area would be helpful.

Thanks!

[CodeRed]

Being a corporation vs a different type of business set up is not going to increase/decrease the legality in the United States. Being one of the few remaining US based affiliates, I run mine as a sole proprietor.

That said, incorporating vs other business types offers several legal advantages but it also complicates your taxes. But yeah, consult your CPA to see what he says.

I have read no where that being an affiliate in the US is not legal, especially given that poker in the US is legal....

[Mike]

especially given that poker in the US is legal....

I think that's a little bit of a stretch. Poker is legal is some states, but not the US as a whole.

I did speak with a CPA and formed an LLC (as a c corp), mainly because it just simplified things. It's much easier for me to have this separate entity to take income from vs everything coming through my personal bank accounts. I can also give myself and steadier income while still providing some tax benefits.

Example: If decide my salary is going to be $120k a year, I can just pay myself $10k / month, even if the business earned $40k that month. $30k is considered operational revenue and is not taxed as income tax on my person but rather on the c corp. One of the benefits is I save having to pay fica, payroll tax, etc on that extra money. I still have to pay income tax on that money, but it is under the c corp as a separate filing. If I were just a sole proprietor, I would have to pay all of the taxes on everything that came in.

I forget the numbers that my cpa showed me, but it turned into substantial savings over the year.

When I first started out, this was just part-time and everything just came in through my personal accounts. Once I started getting checks over $10k / month, I knew I had to set this up differently. In addition to the tax savings, it's much nicer having personal finances separated from business finances. I find it provides more stability and I don't use my personal money to fund transactions that are business related. Basically, it helps me budget easier.

[parttimepoker]

The affiliate issue is grey in the US. You're not going to get a final word from anyone; if you're concerned you should seek out a lawyer familiar with either online commerce or online gambling and get a "legal opinion" on your business (not that it did PokerStars much good).

I would talk to a couple of CPAs and not rely on any advice you get on an internet poker forum (despite the advice being fine so far). Everyone's situation is so unique that you're not going to get a great answer for you.

[ak]

I know many website operators base the legality on editorial or first amendment protection. The First Amendment however does not protect writers or owners from liability for the foreseeable consequences of their speech. In cases where writers or speakers encourage their audience to commit certain illegal or inherently dangerous acts, liability may rest with speakers and the forums that they use. *source

Does this include promoting online gambling ? who knows, Casino City filed a suit against the state of Louisiana in the past to fight possible future charges but the courts dismissed it. I'm not real familiar with the case maybe Corfman can go into more detail.