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Google Affiliate Network Launches New Interface

Posted: 08 Jul 2008 12:30 AM CDT

Today the recently announced Google Affiliate Network (formerly DoubleClick) launched a new interface to publishers. You can access it at Connect Commerce.

The look and feel of the site is very ‘Googlesque’ and at a first look it all seems fairly straight forward to use.

Ultimately the interface is secondary to performance so we’ll see how it goes in the coming weeks.

Are you promoting any products from the Google Affiliate Network?

1. Sole Proprietorship

The sole proprietorship is the most simple form of business entity. There is no formal procedure to form a sole proprietorship and there are few formal accounting requirements. There are no separate tax forms; you file taxes on your own personal income tax return. You can easily exchange personal and business assets. This is how most bloggers and freelancers operate.

The downside of these "loose" requirements is that sole proprietors are personally liable for debts, obligations and the like of the business, including lawsuits. Personal assets are essentially treated, for liability purposes, as assets of the business.

Additionally, since your business income is reported on your personal return, deductions expenses like medical insurance are limited to the caps and restrictions for individuals. In most cases, these deductions are less favorable to take as personal expenses than as business expenses.

2. Partnership

A partnership (sometimes called a "general partnership") is also a simple form of business entity.

A partnership operates from a tax perspective as a "pass through" entity which means that all items of income and deductions pass through the partnership to the partners according to percentage of ownership or partnership agreement. Those items are then reported on each partner's respective personal tax return. No income tax is paid at the partnership level (though a partnership may be subject to other state and local taxes).

As a result, personal and business assets are not separate and personal assets can be subject to the liabilities and obligations of the partnership. Additionally, just like with a sole proprietorship, the availability of certain types of deductions are limited to the tax floors and ceilings on your personal income tax return.

3. Limited Liability Partnership

A Limited Liability Partnership ("LLP") is similar to a general partnership. There is one significant difference: in most states, an LLP may register with the Department of State. The benefit of registration is that each partner is not liable for obligations and liabilities arising from the "negligence, omissions, malpractice, wrongful acts or misconduct" of the other partners. In other words, so long as you observe the proper rules, liability is largely limited to your own actions.

The LLP, like a regular partnership, is treated as pass through entity for federal and state tax purposes. Again, income and losses pass through to the partners either in proportion to ownership or according to your partnership agreement.

An LLP does not offer complete liability protection. Although an LLP has limited liability for "negligence, malpractice, omissions, etc." there is unlimited personal liability for contractual obligations of the partnership such as, for example, promissory notes.

4. Limited Liability Company

The Limited Liability Company ("LLC") is probably the best known corporate entity other than a regular corporation. It's a hybrid entity that offers the liability protection of a C corporation with the tax option to be treated as a partnership or a corporation.

An LLC can be structured to provide for added flexibility, including unlimited members. An LLC also provides ease of operation and possibilities for expansion which makes it attractive for a number of freelancers.

An LLC is govened by an Operating Agreement, which outlines plans for business management. Banks, mortgage companies and other institutions will want to see your agreement when making loans or setting up accounts. The Operating Agreement also allows you to set up the "control" of the corporation and limit the transfer of interests.

Even though the LLC offers pass through tax treatment, liability is limited in much the same way as with a C corporation. This means that so long as you follow the corporate formalities, as well as keep your personal assets separate from your business assets, your liability will largely be limited to your business assets.

5. S corporation

The S corporation is another special form of corporation that operates like a C corporation but is taxed like a partnership. There are strict limitations on the structure of an S corporation including the number and types of shareholders.

The S corporation is considered a good vehicle for small, closely-held corporations. One of the most attractive features of the S corporation is the ability to “slice up” distributions to shareholders and reclassify those distributions. Traditionally, compensation to shareholders who also served as owners was taxable as ordinary income. As compensation for services, it was also subject to self-employment tax, which is the self-employed person's version of FICA (Social Security and Medicare contributions). The rate for self-employment tax is 15.3% of wages (the equivalent of the employer and employee portion of FICA). This tax is on top of the actual income tax on those wages. The result is a painful hit – the same as operating as a sole proprietor.

Since 1984, there have been a number of tax packages passed that have made the notion of dividends more appealing, especially the legislation passed under President Bush's first term, which lowered those rates. So practitioners started thinking: what if you paid yourself a dividend instead of a salary? Under the old tax laws, that wouldn't be a good thing. But under the new tax laws, it may result in tax savings. This is the feature that is most attractive to freelancers; however, you will want to make sure that this is set up properly so that you don't create a tax, legal or Social Security problem. And oh yeah, it's definitely worth mentioning that the IRS doesn't like it…

The S corporation also has a number of restrictions relating to ownership – be sure and check out these ahead of time. If you lose S status due to a reporting or management violation, the time period is generally ten years before you can regain your status. The default is that you would be treated as a C corporation, which likely not a good thing from a tax perspective.

6. C corporation

A C corporation is what most people generally think of when they think of corporations - C corporations are the companies usually followed by "Inc" in their names, as in Coca Cola, Inc.

The advantages of a C corporation are continuous life, clear divisibility of assets between personal and corporate, limited liability among shareholders, freely transferable shares of stock, virtually unlimited options on structuring stock ownership, and favorable tax treatment for certain expenses. All good, right?

The disadvantages of a corporation are increased administrative expenses, compliance formalities and the potential for "double taxation." Increased administrative expenses are due to more complicated accounting and tax compliance (i.e. filing corporate returns). "Double taxation" is the result of a C corporation being a separate taxable entity and not a pass through. This means that the C corporation pays a tax on its income for the corporate year and the shareholders pay tax on dividends received from the corporation. Additionally, money that is paid out as salary is reported as ordinary income and is subject to FICA (Social Security and Medicare taxes) on the employer and employee sides; in a one person corporation, this is largely the same result as paying self-employment taxes since it's the same pot of money.

In most cases, a C corporation is "overkill" for a freelancer with no immediate plans for expansion, hiring of employees, etc.

The Bottom Line

Be informed. Research. Know enough to know the direction that you generally want to go. But don't assume that information that you glean from friends or the internet (even if it comes from a reliable source) is sufficient to make a business decision.

Laws vary from state to state as to how various entities are structured, so check with your tax or legal professional for specifics: I can't stress this enough. While it feels cheap and easy to simply incorporate online, you may be creating a bigger monster – some states charge annual fees for incorporated entities which can add significantly to your tax bill. Additionally, creating an incorporated entity may subject you to local taxes that you would not have been required to pay if you remained unincorporated.

If you don't get proper advice, you can also make elections or fail to make elections that can result in serious tax consequences. We often joke that our office is like that Midas commercial: you can pay us now or you can pay us later. Don't forego important advice to save a few dollars in advance: you may find that you're really paying for it later.

For more information about tax and blogging, check out my handy list of prior articles on the subject including Problogger articles!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation. If you have a question, ask the taxgirl.

Summary of My Experience

Let me cut to the chase - While Plurk is smaller… for me it has been more effective at driving traffic to my blogs, the numbers and quality of interactions has been high, there is real opportunity to build profile and it’s becoming quite feature rich. Read on to learn more.

The decrease in performance and lack of new features at Twitter has caused many of it’s users to explore different social messaging tools like FriendFeed a smaller group have run to Plurk. The weight of numbers using the service is considerably smaller from what I can see - but it’s an enthusiastic community and I’ve been enjoying engaging with them a great deal.

Traffic

I am always asked about how much traffic these sorts of sites send to my blogs so lets start with this one. Over the last 30 days here is how many unique visitors Twitter and Plurk have sent to ProBlogger.

I should make a few of observations to give these stats a little more power.

1. The Twitter figure will be actually higher than this as it only measures people arriving from twitter.com and not any of the many Twitter clients that are out there.

2. On Twitter I have over 7600 people following me - on Plurk I have 865 ‘friends’ (meaning we mutually follow each other) and 579 ‘fans’ (meaning they follow me). So in total Plurk has 1444 followers (less than a fifth of Twitter).

3. I’ve included ALOT less links to ProBlogger on Plurk than Twitter. Every single post I do automatically goes up on Twitter - probably about a tenth of these go up on Plurk.

So all in all I’d say that Plurk probably does better at driving traffic.

The community there seem to love the sharing of links. The cool thing is that when you share links discussions often pop up around your links also. For example - this plurk had almost as many comments on it as the post it linked to here on the blog!

Interaction/Conversation

Social Messaging sites area all about networking and conversation. So how does Plurk do on that front?

I’ve written previously (and given an actual example) of how Plurk differs from Twitter in it’s conversations (ie that Plurk tends to be more interactive between one persona and a group of people on Plurk as followers interact with each other as well as the Plurker). I still find this to be true.

On average I’d say that when i post a question Plurk AND Twitter that I get more responses on Plurk despite having less than a fifth the followers. This is because conversations on Plurk tend to stay alive longer as they are put on your followers timelines not only when you write them but when people respond to them (a feature called ‘new responses’). This means people tend to reply or comment not only once on your initial plurk but later on as others comment.

I have to say that having each plurk and it’s responses contained into the one thread of conversation is gold when it comes to referring back to previous conversations.

Size and Key Influencers

I have heard a few people critique Plurk for not having ‘key influencers’ and for being ‘too Small’. Twitter and FriendFeed have their Scoble’s while on Plurk Robert Scoble has a lot of fans and friends but has only plurked twice since June 10.

While it’s true that there might be a few less ‘cool Web 2.0 kids’ on Plurk there are still some amazing people. I actually find that the quality of conversation, wisdom and expertise on Plurk is as high as it is on any other social media site. People are people and while there are fewer numbers I actually enjoy the intimacy of Plurk - something that perhaps would not be achieved if all the cool kids brought a huge influx of numbers over.

That’s not to say that some bigger personalities wouldn’t be welcomed on Plurk - but just because they are not active doesn’t mean it’s not worthwhile.

Update - The lack of ‘key influencers’ and smallness on Plurk also leaves more room for others to fill their shoes. I’ve seen a number of Plurkers really take on leadership in that community over the last few weeks. The Pond might not be quite as big but they’ve made a name for themselves and are leveraging that profile really well. I suspect that on Twitter they may have become a little lost.

Features

I’m enjoying the development of Plurk in terms of features being rolled out. With Twitter the emphasis seems to be on keeping it running rather than breaking new ground. There is some great development happening around Twitter by developers (I’ve recently loved playing with TweetDeck for instance) but Twitter itself has had few new features added to it. Plurk on the other hand has had new features being added every week (if not every day or two). It’s not perfect and still has bugs from time to time (and I wish it’d release an API to let developers build tools for it) but there’s an energy and feeling of excitement about it that I really enjoy.

Conclusion

Plurk has not replaced Twitter for me and I don’t foresee that it ever will. However for me it’s been a rich source of ideas, community, connections and conversation. I’m finding new ways of using each social media tool that I interact on every day and see real potential in my continued use of Plurk. Yes it’s smaller than some other social messaging options - but size doesn’t always matter….