question Legal protection when selling domains

[Rubik]

I'd like your opinion as to whether it's best (for a U.S. citizen, in my case) to have an S corporation or LLC when selling domains, in order to have legal protection. Or can one safely sell domains as an individual without a legal entity?

Thanks in advance for your insights.

 

[hawkeye]

A 'lot' of people/domainers have been selling domains for 20+ years, and it's doubtful if more than 3% (if that) are S corp or LLC. So the choice to do so, is up to the seller of domains.

 

[Kate]

If you are making regular sales, and a consistent profit then it makes sense to incorporate. Then you can claim tax benefits and write off business expenses. A CPA can advise you based on your personal situation.
Incorporating is recommended for asset protection purposes.
For occasional sales it's probably overkill.
If you already have an incorporated business, then it could be used as a vehicle for domain sales why not. A dedicated entity is not necessary.

As to the question of legal protection, you need to outline what kind of risks you have in mind.
Do you mean any of the following:

• asset forfeiture
• lawsuit for TM infringement
  
• divorce
• ...

Just setting up a company will not protect you against third-party claims. However it can help contain the damage if someone sues you, and protect your personal assets. On the other hand, if the company is making a lot of money it will be a visible prey for ambulance chasers. Whereas an average individual is not an attractive target, because you don't try to squeeze blood out of a stone right.
Selling domain names is a safe activity. If you don't do stupid things, the odds that you will be hit with a UDRP or lawsuit are slim. If you own valuable assets like LLL.com you might have to fight a frivolous case one day, but it doesn't happen to everyone who owns LLL.com. It's not that easy for another party to hurt you unless you give them the ammo, they have to make a case.

Lawsuits are a fact of life, they happen in every business, when there are financial stakes or contested assets. It's not a domain thing at all.
I think you are worrying too much or is there anything that makes you think you are exposed to a significant risk ?

Disclaimer: this is not qualified legal advice.

 

[Rubik]

@Kate @hawkeye Thank you for your comments!

So Kate, there's not any specific reason that I'm concerned about legal liability in buying and selling domains -- maybe I'm just a worrier! I'm just concerned about legal liability in case someone decides to sue me for no good reason. I have an S corp anyway, so I might do my domaining through that entity for peace-of-mind. Probably overkill, as you say.

Thanks again for your opinions and info!