Which business classification (legal entity) should I select?

Introduction

When you sign up as a publisher with Rakuten Advertising, you are asked to select a legal entity type or business classification. Though we do not make individual recommendations, we provide general information below to give your team some basic context. Ultimately, this decision is up to you, your accountant, and your legal team. You can update these settings in your Publisher Dashboard; see “Updating your Business Classification” below.

 Publishers Outside the U.S.

Publishers who receive commissions outside of the United States must select “Foreign” as their legal entity. If you are located outside the U.S. and do not select this option, it will cause a delay in your signup process. See below for more information.

Individual

Select Individual if your business is not incorporated. This option is typically for independent contractors, consultants, or freelancers. Registering as an individual business requires that you provide a valid U.S. social security number.

Sole Proprietorship

Select Sole Proprietorship if your business is not incorporated and you report your business income and expenses on a Form 1040 Schedule C. This option is typically for independent contractors, consultants, or freelancers. This is the easiest form of business to set up and the easiest to dissolve.

Partnership

Select Partnership if your business is incorporated as a partnership and you report your business income and expenses on form 1065. Partnerships are incorporated businesses. Like corporations, partnerships are separate entities from the shareholders. Unlike corporations, partnerships must have at least one general partner who assumes unlimited liability for the business. Partnerships must have at least two shareholders. Partnerships distribute all profits and losses to their shareholders without regard for any profits retained by the business for cash flow purposes.

Corporation

Select Corporation if your business is incorporated and you report your business income and expenses on form 1120 (C-corporation) or 1120S (S-corporation). Corporations are incorporated businesses. Every form of business besides the sole proprietor is considered a separate entity. This often provides a measure of legal and financial protection for the shareholders. The shareholders of corporations have limited liability protection. Corporations have full discretion over the amount of profits they can distribute or retain. Corporations are presumed to be for-profit entities, and as such they can have an unlimited number of years with losses. Corporations must have at least one shareholder.

Foreign (Publishers Outside the U.S.)

If you receive commission in a country other than the United States, you must select Foreign.

Limited Liability Company (LLC)

Select LLC if your business is incorporated as a Limited Liability Company (LLC). The LLC is a state designation. At the federal level, an LLC is taxed as a partnership. If an LLC chooses, it can be taxed as a corporation at the federal level.

Limited Liability Partnership (LLP)

Select LLP if your business is a Limited Liability Partnership (LLP). A Limited Liability Partnership is a type of partnership recognized in a majority of states in the U.S. that protects a partner from personal liability for negligent acts committed by other partners or by employees not under their direct control. Many states restrict this type of partnership to professionals, such as lawyers, accountants, architects, and healthcare providers.

Nonprofit

Select Nonprofit if your business is a nonprofit or not-for-profit organization and you report income and expenses on form 990. Nonprofits are corporations formed for a charitable, civic, or artistic purpose. Nonprofits are generally exempt from federal and state taxation on their income, and so they are often called "exempt organizations." Nonprofits have substantial responsibilities for reporting their activities, income, and assets to ensure that they comply with federal and state laws governing charities.

Other

Select Other if your organization does not fall into any of the business type choices.

Updating Your Business Classification

Organization owners can update the account’s business classification in the Publisher Dashboard.

Follow these steps to update your business classification:

  1. Go to Account in the navigation header and select Account Details. This takes you to the General tab.
  2. From there, click Edit details in the Company information section and select a new business classification from the drop-down menu.

 Note

Only organization owners can update the account’s business classification. Other user types are not authorized to access the General tab.

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