Laws, laws, crap, more crap, and then more laws...

[Grigori]

Question:  Do you have to have an EIN, an LLC, and a business license to sell your game (download) on-line?

According to my local, county, and state governments, I can't sell anything online (digital or actual) unless I first get a federal tax ID number (EIN), register form something or other with the state and county, and upon completion of that, pay for a business license for the city in which I reside. 

Is it like this in all states?  Did those of you who are selling online or POD go through all these hoops?  I see people selling stuff all over the internet, and have now come to the conclusion that most of them are doing it illegally.  I imagine the chances of getting caught if I didn't become "legal" are slim, but I would hate to launch something that actually sells and then have each and every aspect of the government sweep in, confiscate my stuff, fine me, kill my dog, whore out my girlfriend, and crucify me upon the tree of sorrow. 

So who knows the rules?  Or all you all breaking the law? 

[Grigori]

Edit:
"Or are all of you breaking the law".

Sorry, margaritas....

[Eero Tuovinen]

Not breaking the law here, but I doubt that you'd get any use out of the Finnish law in this situation. Can't say anything more without knowing where you live, but in general the best bet is to contact the appropriate expert in your jurisdiction for advice on how to handle a hobby business. In my case this would be a local official responsible for advising small business, while in the USA I've often seen people suggest a lawyer of some sort.

[guildofblades]

Hi Grigori,

You should be able to do business as a self proprieter operating under your own social security number. As a limited partnership GOB Publishing operated many years under this structure. It just means you will have to keep good business records and be able to fill out all the proper tax forms. Different states likely have different filing requirements, but here in Michigan, than means based on your income level, you have to file and submit estimated tax payments either annually, quarterly or monthly. Those text payments get reconciled at the year of tax filings and you either pay more or get a tax refund depending on weather your total income (after operating expenses) were higher or lower than your estimates.

To do business under an assumed name, however, most states require you to file some form of "Doing Business As" document for business operating at less than any form of incorporated status. The DBA is what lets you legally accept payments as "game company bob" or whatever name you chose as opposed to having to only accept payments and do business under your legal name (as tied to your social security number).

An EIN is the federal Employer Indentification Number and generally is only going to be required is your little company intends to hire anyone on payroll. Though here in Michigan, our Retail Group also needed it as a prerequisite for acquring a State of Michigan Sales Tax License.

Ryan
GOB Publishing