How much money does my web site have to make before going Pro?

Webmasters start an online business with the intent of earning some extra cash to pay bills or making a full-time living. Others want to speak about their passions and decide to work on a website to meet people with the same hobbies. And often times, these hobby sites can become serious online enterprises.

Business FundingBut the same question remains for many web property owners. How much money does my web site have to make before going Pro? Here we define “pro” as having a legally registered business entity and leaving a job to work on the site full-time.

In broad terms, the amount of money you “must” make from your website to go pro is different depending on the individual and where the business is located. There is no magic number to which everyone should aspire. But in specific terms, there are several considerations that webmasters should review when deciding to go pro or not.

First, let’s look at leaving your job to maintain your website. The amount of money that you require is at least the same amount you receive from your employer. You must be able to replace your current earnings. But for some people, even that may not be enough.

Specifically, you must be able to earn enough money on a monthly basis to cover BOTH your personal and business expenses. So when you calculate how much money you need, you list all your costs including household expenditures, auto, life and home insurance premiums, clothing, food, gas, children’s lunch money, children’s school supplies, pet food, entertainment, savings accounts, and anything else on which you spend money. Then you make a list of everything it takes to run your website. Domain name registrations and renewals, hosting account or server, advertising, ISP, telephone, and any costs incurred through outsourcing. Then add the two numbers together and this is the absolute minimum amount that you require to live. This is your magic number.

Second, state, provincal or federal regulations may dictate what you must do. For example, in Canada, GST law states that you can basically “ignore” collecting and remitting the GST for entities under $30k. Any businesses that see gross revenues in excess of thirty thousand dollars per year are obligated to register for a GST number. So in this scenario, going “pro” is dictated by the government and the magic number is $30k.

Third, in the same vein as tax laws, the government may require you to have business licenses, permits and other forms of legal documentation for your business. At the very least, you may have to register a sole proprietorship to open a bank account. So again, external factors may require you to go “pro” or maybe “semi-pro”.

Fourth, tax advantages will be a deciding factor in going pro. The bigger a website becomes in number of users and sales volume, the larger the tax burden, and the greater the chance of being sued. Both of these points will impact how you structure your business. To minimize taxes and to avoid personal liability with lawsuits, you may have to incorporate. This threshold might come at $100k per year or it may be $500k.

So you can see that many factors determine how much money is needed from your web site before going Pro. And now you should clearly understand that no two people have the same requirements or the same magic dollar figure.

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