The answer is that from a tax point of view, it is advantageous to trade through a limited company as long as income is drawn from company by owners as dividends from their shares and amount of dividends drawn is restricted below 40% band rate (i.e. œ31,063 for tax year 2002/03). That way, owners have no further personal tax ("income tax") to pay. Moreover, dividends are not subject to national insurance contributions. This is excellent news of course. But, if dividend income falls within higher rate bracket of income tax (i.e. above œ34,515), they will be taxed at 22.5% on excess, which of course will increase tax burden. The company profits are subject to corporation tax rates. Those are lower than income tax rates.

The most catastrophic scenario is when director takes his reward from company as salary. Then his/her salary is taxed at income tax rates (like a sole trader's income). That is because, unlike sole traders, tax system treats companies as separate from their owners because a company is a separate legal entity. The problem is that income taxes are higher than corporation tax rates. On top of that, they will be subject to employee and employer national insurance contributions, which of course increase tax burden and render his position worse than even an unincorporated business ("sole trader"), because NIC Class 1 on payroll are higher than NIC Class 2 paid by self employed.

In contrast, a self employed person ("sole trader") is taxed at income tax rates on profits from his business, which are added to his other sources of income. As it has already been mentioned, income tax rates are overall higher than corporation tax rates. On top of income tax, national insurance contributions class 4 are payable on business profits within a specified band (7% on profits between œ4,615and œ30,420). National insurance contributions Class 2 are also paid by self-employed people, although those are lower than those payable by company directors on their salaries.

To illustrate above, let's take a simple example. We have a limited company and a sole trader. They both make œ60,000 profits each in tax year 2002/03. We assume that company director takes a salary equal to amount of his personal allowances (untaxed income) of œ4,615 and balance as dividends. The company will pay corporation tax at 19% equal to œ10,523 and nothing else. The sole trader will pay income tax œ16,542, National insurance Class 2 œ104 and National insurance Class 4 œ1,806. Total œ18,452. The bottom line is that person that has incorporated his business into a limited company will make a tax saving of œ7,929 compared to a sole trader! Isn't that fantastic?

Somebody might be wondering: why is this entire happening? The official explanation is that, this government, to help economy grow, encourages people to leave as much profits within their businesses to be reinvested, instead of being taken out and spent.

But affiliate programs are changing. Many, many companies are realizing that best way to sell products and services on Internet is to recruit affiliates. Along with this comes a form of competition. Affiliate program managers want you to sell their products, not products of their competitors. How do they make sure that you stick with them and not defect to other side? They do their best to make their program more attractive to you.

There are many ways to make a program more attractive to potential affiliates. They can offer a higher percentage of profits, and/or they can offer more benefits. Benefits can come in many forms, but topic of this discussion will be benefits that come from way sales and visitors are tracked.

Let's bring Amazon.com back into limelight for a minute. They are huge...everyone knows about them...everyone knows that you can create a site, add some good content, bring in a highly targeted audience, and sell them books! Simple enough...create a site with a good topic, drive traffic to it, send them to Amazon, and get rich. But...its been tried before...and guess what...not that many of those 300,000 affiliates even earn enough to get minimum $25 check in mail every quarter.

Why? Is it because you have 299,999 competitors out there selling Amazon.com books just like you are? I'm sure that plays a part, but real reason is way you are credited for a sale. You work hard to create a website full of content, and work even harder to promote it and bring visitors to your site. Then, what do you do with that coveted visitor? You wisk them off to Amazon to become their life-long customer, and never to return to your site again!

That may not seem fair to you, but can you complain? They give you a whopping 5% of sale, maybe even 15% on some of books if you are lucky. Or, worse yet, they bookmark Amazon.com, and go back to buy books tomorrow and you don't even get 5%. Either way they are gone. That precious visitor that could have been a life-long customer of yours is now off to Amazon.com. They will buy a book or two to test out process. Then after their books arrive, they will merrily open up their browser and type in http://www.amazon.com and spend their entire paycheck buying books.

How much do you get from this return visit? Well, it WAS your visitor after all, right? Unfortunately every penny of that visitor's paycheck will fall into Amazon's pocket. Of course you have to feel sorry for Amazon, though. They aren't making any money after all (violin music playing in background).

What happened? The same that happens with many affiliate programs. You get paid per click, per lead, or per sale. From that point on, they own that customer.