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Taxes & Online Businesses

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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

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

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

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

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

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

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

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

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

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

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

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

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

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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