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 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 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 possibly keep track of how

much money each person generates online but then

again, it 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 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 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 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 or business), it is not

required to collect sales tax from costumers in that

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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 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 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 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 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

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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 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

income-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 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 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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Taxes - And Your Online Business

(Theyl 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; it 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l 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.

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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 and don 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 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 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

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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

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 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.

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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 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 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

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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 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.

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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 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 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 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 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 contact experts regarding this matter

such as a lawyer or a certified public accountant.

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Taxes - And Your Online Business:

Paying Online Sales Tax Doesn 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 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

documentation.

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.

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