Buying and Selling Domains

People always come up with innovative ways to make money. One of the most innovative trends for making money has been through the Internet. Companies buy and sell their products all the time over the Internet, but a little know exchange is the exchange of domain names. Whenever you type in an address in your Internet browser, you are looking up a domain name. The Internet Corporation for Assigned Names and Numbers or ICANN, keeps track of all the domain name owners.

Finding a Domain Name

The first step a company needs to do is to use a WHOIS search to find out if anyone already owns the domain. If no one owns the domain then the company can use a domain registration service from a registrar or a hosting company like UK2, to buy the web domain. It is then registered and the company will have the right to put whatever it wants on the domain. Usually these domain contracts last about a year. After the contract expires, then company will have the option to either renew the contract or let the contract expire. If the contract expires, then anyone can then purchase the domain and put whatever they want on it.

Get a Memorable Name

By buying a domain that is easy for its consumers to find and remember, the company can get more consumers to go to its web page. For example, most companies would want to have the name of the company as their domain instead of something else. Apple would want, not So, you can see the proper domain name can help a company drive traffic to their web page.

Profit in Domain Buying

This is where some people can find profit in domain registration. Profitable entrepreneurs will buy web domains as an asset. They will then hold on to that asset in the hopes that someone will want to purchase that domain name from them. Seeing the example earlier, having a domain name that is relevant and easy for consumers to drive, will help more people go to the web page, which in turn will make more money for the company. This is why the company will then purchase the domain from someone else for an elevated price. Some domains have been known to sell in the millions of dollars.

As with anything, if you are making a gain on your sales, then you will need to pay taxes on any gains from selling domains. These gains are known as capital gains and are recordable in your taxes. The gain is calculated by subtracting out your purchase price from the sales price of any domain you sold.