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 plaguing your mind, and one of them may be all about whether you need to pay taxes for your online business or not.
Calculating and paying your own taxes alone is already one confusing ride, and certainly it will get more confusing with the need to figure out taxes for your online business.
However, as they say, all problems have a solution. 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 start their own online business.
First of all, it is very hassle-free compared to having a bick amd mortar business offline. You see, in online business, you only have to type and click for your business to boom.
There is little need for manual labor in an online business. In most cases, you don’t even have any physical inventory to deal with. You can even work at home in your pajamas while managing the online business. Most customer contact is over the internet and the phone. Face to face contact is minimal.
Now the question is: are online businessmen or entrepreneurs exempted from paying taxes? The answer is no. All individuals earning money online must 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 doing business online is declaring their income honestly. 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 a great venue for tax-free shopping, which lures more and more customers each day. Online retailers even use 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 tax-free.
However, the fact is, some Internet sales are actually subject to what we know as “sales tax”. Online consumers are the ones often responsible to remit any unpaid sales tax on whatever online products they purchase. They can actually remit it directly to their state when they file their taxes.
Collecting Sales Tax
The process of determining whether you should pay taxes for your online business or not is quite confusing and overwhelming – especially, if it’s your first time running in online business.
However, here are just some few tips you should remember: you can determine the obligation to pay the so-called “Sales Tax” 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 has no obligation to collect sales tax from costumers in that particular state.