Taxes -- And Your Online Business Trying to land a great job which gives a good pay is quite difficult to do these days. Not everyone can actually have the job of their dreams with a good salary to boot that's why more and more people are resorting to having their very own online business to suffice their needs and wants. If you are one of the many people who is interested in starting your very own online empire, you should be aware of the basics of taxes and your online business. More Than Just Social Networking More often than not, people initially become exposed to the wonders of the Internet thanks to social networking sites or online games. However, people grow up and their interests expand beyond just meeting new friends and people and they become more interested in exploring the income generating power of the net. If you just have the know-how on making your own website and promoting your very own webpage, you can actually go a long way in the realm of online business. Know The Basics Of Starting An Online Business Once you decide to start your very own online business, you have got to ditch your amateurish ways of thinking and move on to more professional and business-like practices. The first thing you should know when planning to start an online business is that you are not exempted from the responsibility of paying for taxes. Income tax, sales tax, use tax -- those are only few of the different kinds of taxes that you might encounter once you start your online business. The second thing you should consider is what specific kind of online business you would want to start. Do you want to sell clothes online? Do you want to sell your painting online? Or maybe you would like to buy and sell pre-owned stuffs? Well, whatever kind of online business you would like to have, just make sure that you coordinate it with the laws and regulations of your state. Your website or webpage should also have its own terms and conditions. If the law in your state requires you to make the customers pay for tax for the items that they would like to purchase from you, don't forget to make your costumers aware that they will be paying an additional tax for the items that they will purchase from you. That way, your customers or clients will be impressed by the fact that you are so open and honest with how you handle the fees and income of your website. Never Try To Dodge Your Tax Responsibility The best way to ruin the future of your online business is to try and avoid your responsibility as a tax payer. When you start your very own online business, do try to consult a lawyer or your local government town hall for assistance on legal matters. No matter how small you think your online business may be, there will always be a corresponding tax payment for your online transactions. Be sure that you are aware of the different states that are offering tax-free sale transactions as well as the states that have different tax collection percentages. In issues that concern taxes and your online business, ignorance is definitely not an excuse so you might as well gear up and fill yourself with adequate knowledge for your online business to prosper. Taxes -- And Your Online Business: Basic Things You Need To Know So you want to start your very own online business. Aside from having unlimited access to the Internet, you also need to be armed with adequate knowledge about taxes and your online business because without it, you will surely be at loss. Online retailers, or more commonly known as e-tailers are not exempted from paying taxes, contrary to the common misconception of most people. E-tailers are still included in the rush for meeting the April 15 deadline for tax filings. However, veteran e-tailers would say that the most difficult part for online business owners is navigating and complying with the confusing and complicated laws and conditions governing day to day sales taxes. An Everyday Challenge If you are one e-tailer who would like to take your online business seriously, then you should be prepared to deal with the fact that handling and managing sales taxes is actually an everyday challenge. The truth is, a lot of e-tailers are required by the government or their state to file and remit sales tax to states on either a monthly or regular interval. The basis for the filing of sales taxes would more or less depend on how much revenue you online business generates. Few Tips For E-tailers It is very vital that you understand your responsibility for sales tax. You must also know that the idea that e-commerce companies are required to collect and remit sales tax in every state is one big myth. You only have to pay sales tax if you have nexus in that certain state. If you are a neophyte in online business, perhaps you don't have an idea what the word nexus means, right? Well, in online business jargon, nexus means a "connection". Put in application, making a sale in another state does not mean that you automatically have a sales tax obligation. You have to put in mind that there are many rules and laws that you need to consider before you can determine whether or not you will need to pay for sales tax in a certain state. When you create your very own nexus in a certain state, you are then required to calculate, collect, report and remit the sales that you make in that certain state every time you have a transaction there. This is the reason why you are obliged to pay tax sales based on the location of your business. However, you must also keep in mind that there are also other ways to create your very own nexus in a state. Aside from physical presence or structure of your business establishment in a certain state, you can also establish a nexus by having sales representatives present in that state, tradeshows, mobile stores, etc. Trying to make an online business work amidst the seemingly confusing and complicated rules that apply to different states can be quite impossible. However, one must not lose hope; with the help of professionals in the legal field and certified public accountants, you will surely be enlightened as to what steps you should take for your online business to stabilize and prosper. By being armed with the right knowledge about taxes and your online business will surely help you achieve success in the realm of online businesses. Taxes -- And Your Online Business (Taxes Exist Online?!) So, you want to start your own online business? Before you start designing your own website or webpage, make sure that you know all about the do's and don't of starting an online business and that includes the technical, financial and legal matters of the business. When you decide to start a business, you should be aware and prepared for whatever legal or financial issues that may arise. If you think that you can escape from paying taxes by starting your very own online business, think again -- your dreamy balloon may burst once you get into complications regarding taxes and your online business. The Truth About The Internet Being A Tax-Free Zone More and more shoppers are getting lured by online shops and retailers because of their famous tag line of "no-tax shopping". What most people don't know is that that certain tag line used to lure online shoppers is not applicable to all states. For you to be able to understand this concept better, here is an example: A woman from Indiana regularly purchases exotic orchids through an online shop based on Switzerland. Since she purchases and sends her payments directly to Switzerland, she is not obliged to pay any sales tax in Indiana since her orchid supplier has all of its facilities in Switzerland. A few months later, the exotic orchid supplier of that woman has decided to open a store in Indiana. The woman still purchases online but she already has to pay for the sales tax of the orchid since there is already a store based in the place where she is staying. In other words, the responsibility to pay for taxes is an interdependent status between the consumer and the supplier. By that example, we can Come to a conclusion that the Internet is not really a tax-free zone. It depends on the location as well as the type of business that one is involved in. The Responsibility To Pay Sales Tax Admit it, nobody really loves to pay taxes. Perhaps even the rich people are irritated come tax-paying time because it is sometimes a tedious and complicated process. There are a lot of rules and laws to refer to before one can actually come to a clean calculation of the taxes that he or she must pay. If an individual lives in a state that is known for collecting "sales tax", you are not exempted from it even though you try to escape it by making a lot of purchasing through the Internet because you are still required to pay for the "sales tax" directly to the state. When you pay a "sales tax" directly to the state, it is no longer called a "Sales tax" but rather a "use" tax. Perhaps the only difference between "sales" tax and "use" tax boils down as to which person -- the buyer or the seller -pays the state. "Use" taxes are usually used by the state to make sure that they collect the right amount of revenue on every taxable item purchased within the state borders. There are actually still a lot of points to be discussed about taxes and online business and the points mentioned here are just what we may call "a tip of the iceberg". In determining what's the right thing to do in handling taxes and your online business, it would be best to go beyond researching for legal answers alone. Consulting the help of lawyers and other legal professionals would probably benefit you more than you expect. Taxes -- And Your Online Business (They'll Catch Up On You) Doing business online is starting to be a much preferred way of transacting business both by the sellers and the buyers not only because it is way more hassle-free than real shopping but also because it provides a chance for a tax-free business transaction to transpire. However, the happy days of transacting business without worrying about the taxes that come along with it will soon be over because on July 1, 2008, Washington will be joining 18 other states in America that oblige certain online or e-commerce businesses to pay and collect sale taxes. If you have an online business or if you are planning to start one, then you will also be required to collect taxes from your consumers or costumers if ever you are residing in a state that requires you to pay taxes. A State Law Passed In 2007 The changes to be implemented on July 1 are the result of a state law passed in 2007. The certain state law changes the way the taxes are calculated -- a major alteration that spurs some headaches and confusion among all online retailers. Take this situation for example: if you decide to shop and purchase in a shop or store, you are obliged to pay the tax rate depending on where the store is located. However, if you decide to have the stuffs that you purchased delivered to your doorstep, you are obliged to pay for the tax rate of your state. In technical terms, the tax system will be changed from origin-based to destination-based. The Tax Is Not Levied On The Business Yes, you read that right -- the tax is not levied on the business, instead, it is levied on the part of the consumer. It is the obligation of online businesses to collect tax from its consumers and remit it to the state. The government is strictly issuing penalties for businesses that fail to adhere to the law. Online businesses are not excused from this law, in fact, more law enforcers and agents are being sent to check on the legality of online stores and businesses. One common Internet myth is that the Internet Tax Freedom Act allows online businesses from being exempted from collecting sales tax from their consumers. It is truly considered as one big myth because in reality, it does not actually stop the states from collecting sales tax on online businesses and other e-commerce. Sure, the Internet Tax Freedom Act does not impose sales tax on Internet access fees but aside from that, taxes are already imposed. When You Make Money Online, You Have To Pay Taxes When you earn, you really have to pay taxes; i t's a known fact and perhaps what we can call a bittersweet reality. Sure, it may be a bit difficult on our part to surrender a part of our hard-earned money for tax dues but the truth is, everyone is doing so. All income-generating businesses and stores are required to pay their due taxes. A law is a law and it must be followed at all costs. Some people who are involved in online businesses try to doge their tax-paying responsibilities. They think they are smart enough to be able to escape their tax-paying duties but the truth is, they'll get into deeper trouble once the government finds out their dirty work. If you want to be successful in your carrer as an online businessman/woman, try to be as clean and honest as you can with your taxes and your online business. Taxes -- And Your Online Business: Paying Online Sales Tax Doesn't Have To Be Taxing Almost all tax payers would say that the process of paying taxes is one of the most tedious and less-liked activities that they can imagine and paying sales tax for an online business is not exempted from the common misconception. When the issue pertaining to taxes and your online business arise, you usually take it negatively which would in turn end up in a negative note. However, if you decide to change the way you think and turn your negative approach to a positive one, then you would surely realize that paying online sales tax is not a taxing job at all. Online business owners or e-tailers are commonly complaining about online sales tax primarily because they don't clearly understand and grasp the meaning, scope and limitations of the law and regulation that pertains to it. If you want your online business to boom and prosper, you should have the initiative to gain as much knowledge as you can about taxes and online businesses. Be Aware Of Taxability And Exemptions You should be aware that not all services or products are taxable or taxed in the same way as other services and products are. Furthermore, the taxability of some products also differ from state to state. There are also exemptions based on how the product is used as well as who uses them. An example to this would be schools and non-profit organizations -- these kinds of institutions may not be required to pay sales tax if they avail any of your products or services. Take note that exemptions require clear and concise doc umentation. Consider State Sourcing Rules and Validate Addresses There are more or less 12,500 tax regions in the United States and for you to come up with an accurate sales tax calculation, you have to identify and validate the "roof top address" and then apply it to the exact set of sales tax rates of that certain transaction. You must remember that the rate of the sales tax applied to a sale or purchase may be made up of a country sales tax, a state sales tax, a city sales tax and other special taxing jurisdictions. The so-called "roof top address" is very important is because it serves as a warning that one household in a neighbourhood can have a different sales tax rate that its neighbour, if it is located physically in a different zone already. Use Tax Consumer use tax or use tax is a kind of tax that pertains to the using, consuming, storing and sometimes distribution of personal tangible property. Aside from that, it can also be applied to services which are taxable. For short, you will need to pay use tax in a state where that "usage" occurs. A clear example for this would be: you bought a pair of shoes over the Internet and you did not pay any tax to the seller. However, you used those pair of shoes in your state, so you are subject to pay your state the use tax. As an online business merchant, the abovementioned tips and guidelines are just few of the other tips and guidelines that you need to learn. Taxes and your online business should work together, if you want you business to become successful.
Taxes -- And Your Online Business (Do I Have To Pay Taxes?) Perhaps the most common misconceptions about taxes and your online business is that the two are not related to each other. Most people think that online businesses are not really taxed that's why more and more people are becoming attracted to start their very own online business. If you are one of the many people who is interested in starting your own online business or if you already have an online business of your own, then for sure you have heard about the controversies about online businesses and taxes. Most people who don't really have a stable background about online businesses and taxes would most probably guess that owners of online businesses are able to be exempted from paying taxes. However, in reality, online businesses are still covered with tax dues. "But I Am Working At Home" And Other Lame Excuses Not To Pay Taxes The most common excuse of people who have online businesses who wish to ditch paying taxes is that they are "working at home". What most people don't realize is that taxes are actually based on the sources and amount of the income as well as the types of services and products sold; not on the location of the business. So whether you are working at home, in a store or in a warehouse, you are still obliged to pay for whatever tax is due to you. Internet Tax Is Just Like Any Business Tax Basically, online businesses are taxed just like any other business. The government does not actually collect income taxes based on how a business operates but instead, it focuses on the form of the business. A business based on the Internet still has to register for GST and PST (if applicable) just like any other business. Whether your online business is a sole proprietorship or incorporated, you will still need to fill up some important forms so that your online business can be deemed as legal and so that you can pay the proper taxes regularly. There is actually no big difference between the tax responsibility of an online business and any other business. Online Businesses And Federal Taxes If you have an online business and you are wondering if you still need to pay federal taxes, the answer is yes. But before you go around and complain about the unfairness of the world, you might as well learn more about the federal taxes that you need to pay. If you are a sole proprietor of an online business, any income you earn through your online business will be taxed as income on your PTR or personal tax return. In addition to that, you are also obliged to pay your portion of social security and medicare taxes using schedule SE. However, if you have incorporated your business, the way of paying taxes will become slightly different compared to when you are the sole proprietor of your online business. Sometimes, the tax you pay as an incorporated online business will also depend on the kind of organization. It's either you will pay tax at a corporate level or it will be passed down to you as an income. Dealing with an taxes and your online business can be quite an ordeal if done alone so it would be much better if you'd contact experts regarding this matter such as a lawyer or a certified public accountant. Taxes -- And Your Online Business (Do You Really Have To Pay?) If you are a neophyte in realm of online business, then perhaps you have a lot of questions that are plaguing your mind and one of them may be all about whether you are obliged to pay taxes for your online business or not. Calculating and paying your duly taxes alone is already one confusing ride, and surely it will get more confusing if it will be mixed with an online business. However, as they say, there's no problem that cannot be solved. With just a few tips and guides, you can find out how to pay taxes for your online business without any hassles or problems along the way. The Charm Of Online Business Before we talk about taxes and your online business, let's discuss first why more and more people are getting attracted to starting their own online business. Well, first of all, it is very hassle-free compared to having a business in the non-virtual world. You see, in online business, you only have to type and click for your business to boom. Very minimal manual labor is needed in an online business and one can even get to work at home in their pajamas while managing their online business. Now the question is: are online businessmen or entrepreneurs exempted from paying taxes? The answer is no. All individuals who are earning money online are required to pay taxes. Sure, the government can't possibly keep track of how much money each person generates online but then again, it's one of the citizens' responsibilities to go ahead and be responsible enough to pay for their taxes. The Real Deal About Most Online Businesses The truth is, not everybody who does business online is honestly paying their due taxes. Most online businesses include shopping and it's a known fact that most if not all shoppers despise paying sales tax and adore a bargain that is luxuriously tax-free. The Internet is actually considered to be a great venue for tax-free shopping which lures more and more customers each day. Online retailers have been using a no-tax shopping tag line to attract more online shoppers to their business. Sounds like a win-win situation, right? Online shoppers enjoy numerous tax-free shopping sprees and online retailers don't pay their taxes. Most people probably think that doing business through the Internet is considered to be tax-free. However, the fact is, some Internet sales are actually subject to what we know as "sales tax" and online consumers are the ones often responsible to remit any unpaid sales tax on whatever online products they have purchased. They can actually remit it directly to their state come tax-paying time. Collecting Sales Tax The process of determining whether you should pay taxes for your online business or not may be quite confusing and overwhelming -- especially if it's your first time to get involved in online business. However, here are just some few tips you should remember: the obligation to pay the so-called "Sales Tax" can be determined by the location of the customers, and not the seller. If a business does not actually have a physical presence in a particular state (an example of this would be your online store o r business), it is not required to collect sales tax from costumers in that certain state. Taxes -- And Your Online Business (E-bay And Other Buy And Sell Sidelines) Most people think that the Internet is really a great venue for earning extra income or for generating extra money through sidelines such as buying and selling, auctioning, etc. Most people also believe that transacting small sidelines or business transactions through the Internet requires no tax. However, the truth of the matter is, there are actually taxes that are due for every item purchased or sold through the Internet. Taxes and your online business (if you have one or planning to have one) should work hand in hand for you not to get in trouble with the government. Is Your Online Buying And Selling A Hobby Or A Business? Majority of the people who are involved with E-bay buying and selling would try to say that they don't really have to pay tax from what they earn through the Internet because they are only treating it as a hobby. However, agents from IRS would say that whether it is treated as a hobby or a sideline business, taxes should be strictly implemented. While you may think that doing business on eBay is just something you may consider as a fun pastime, the money that you made, are making or will make is actually still valid to reported as income. You need to consult with the IRS people first before you can truly say that you are exempted from paying taxes while you are participating in your online business. You see, everyone seems to love making money but when the time comes that they have to pay their due taxes to their beloved country, they try almost every possible way to escape paying their taxes. If you have your so-called online business, you should be aware of the rules of the IRS: one is required to pay taxes on all business and personal income and that includes the dough you make selling stuffs on the Internet. Simple Earnings Still Require Tax (Sniff, Sniff) As heartbreaking as this may sound, even the simplest business transaction made through the Internet needs to be reported as "income". For example, you bought an exquisite looking flower vase at a flea market for $5 and then you decide to sell it an eBay for $20. You manage to sell it for $20 so that means you had a $15 profit which would then entail you to report it as income and pay your taxes as fair share. Realistically speaking, if you don't treat eBay as a serious and constant venue for your online business, then perhaps you can get away with selling a few items every now and then without having to worry about the IRS tracking you down with their questions about tax dues and other stuffs. However, if you are a consistent chap at eBay, then the IRS people might categorize your eBay participation as something that is business oriented and you may end up being required to file a Schedule C form and claim the income that you have spurred. If you are fond of doing business at eBay and other similar sites, you may want to assess yourself by asking yourself the following questions: a.) Do I carry my "hobby" in a business-like manner? b.) Do I spend considerable time working on my "hobby"? c.) Do I depend on income from my hobby for my livelihood? If the answer to all those questions are yes, then you most definitely are not carrying a hobby, but in fact a business. By finding out that you are already having a mini-online business at eBay or other similar websites, then you have to be responsible enough to pay for your taxes on your income. Remember that you have a responsibility for your taxes and your online business. Taxes -- And Your Online Business (Paying Taxes Is Just Part Of Business) Any business, whether online or not, really has to pay its due taxes. Some people would resort to starting an online business thinking that they can evade tax payments if they do so but the truth is, the tax dues will surely catch up with them one way or another. Righteous as this may sound, but any business that does not pay its taxes cannot be considered as a business. So, You Want To Start Your Online Business? Trying to start an online business is pretty much the same as starting any business in the world. Some people who are involved with online businesses usually use their ignorance as an excuse not to pay taxes. They would say that they didn't really know where to go or what government department to approach so they just went ahead with their online business without actually referring to the government or the state that they are under. The first thing that you should do if you want to start your online business is to go to your local town hall and try to list down the requirements needed to form a business in your location. You should also ask what is required at both state and federal levels. Most communities would actually require you to register a trade name. If you wish or choose to operate from your home, you should ask about the local zoning laws. Learn About The Sales Tax Requirements Your online business will more or less fall under the category of a mail order business (that is if you are planning to sell stuffs online). You will need to learn about the sales tax requirements that come along with your online business so that you will not encounter any problems in the future. If for example you don't have a nexus in another state, you can still sell and ship your merchandise to costumers residing in another state without actually charging Sales Tax. However, sales to the residents in the same state that you are living in will definitely require a collection of Sales Tax and remittance to the Sales Tax Department of your state. Operate Your Business Honestly If you want to have a successful online business, you should try to keep it as clean and honest as possible. Don't even try to pull off any illegal or mischievous tricks in your business or it may jeopardize your success. Make sure that you abide by the Truth in Advertising requirements; do not give customers misleading ads because they will only end up being disappointed or unsatisfied with your services which could lead to more trouble. In a nutshell, trying to start and operate an online business requires ample time, effort, honesty and sincerity. It's a sad fact that a lot of people use the Internet for scamming others and earning money illegally. However, it does not mean that it should be a trend that should be followed. It is greatly possible to have an online business that is clean, honest and legal. If you really want to pursue your online business, the tips mentioned here will be truly of help to you and if you still need more help and assistance, a visit to a lawyer will surely be of greater help. Remember, taxes and your online business go hand in hand for success. Taxes -- And Your Online Business (Selling On The Internet) Before, garage sales and flea markets were the most popular venues for selling pre-owned or used items that you would want to get rid of and at the same time earn money from. However, thanks to the technological developments that have happened through the years, we can now have easy access to the Internet and have the options to sell our stuffs there. If you have been selling your stuffs on the Internet and if you still have future plans to do so, you might want to consider taxes and your online business before you continue with it. Selling On eBay Or From Your Own Website A lot of people today are getting attracted by the fact that they can actually sell almost anything on the internet by just posting it on eBay, their own web site or any other site that offers practically the same services. However, what most people don't know is that there are actually rules and laws that cover selling items on the Internet. Getting Serious In Your Online Business If you have been selling your stuffs for quite a long time already, you may consider it as an incom e-generating activity, right? Having an online business really has a lot of perks and advantages such as being able to work right at home, not having to have your own boss, etc. However, having an online business doesn't mean that you are free from paying your taxes. When you decide to be more serious about your online business, there are a lot of things you have to consider. Perhaps the first and most important thing you have to consider is the legality of your online business. Make sure that you are not breaking any rule or law so that you and your reputation won't be in jeopardy. In addition to that, you must be aware of the several laws that come along with online businesses such as tax rules. You have to be aware of the different taxation conditions of different states and countries because since you will be having a business online, people from different parts of the world will more or less become your customers or potential business partners. You must also be aware of the process for paying federal and state taxes for online businesses. Maybe you will have some questions such as: "Do I need a tax ID number?", "Do I need to file specific paper works or forms?", "How do I begin to pay federal and state taxes?", etc. Some of the basic things you need to know about having a legal online business is that your business is actually the one that will pay income taxes in pretty much the same way it would if it were a brick-and-mortar kin of business. The address for filing you income tax will be the principal business address of the entity. The laws of the particular states that you transact or have business with are the ones that would determine whether you will be required to pay state income taxes. You should also be aware that a lot of states impose "sales" taxes on items that are purchased by the residents of their state. For you not to get in trouble or end up getting dazed and confused with the many laws and conditions of taxes and your online business, you can try to consult a lawyer knowledgeable in these matters.
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