Internet Tax Obligations
Do I Have To Pay Taxes?
Taxes - And Your Online Business
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
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
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
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
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.
Do You Really Have To Pay?,
Taxes - And Your Online Business
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
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
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
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
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
Ebay And Other Buy And Sell Sidelines
Taxes - And Your Online Business
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,
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
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
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
c.)Do I depend on income from my hobby for my
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.
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
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
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
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.
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 above mentioned
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.
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
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
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
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
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
Remember, taxes and your online business go hand in
hand for success.
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
However, what most people don’t know is that there are
actually rules and laws that cover selling items on
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’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
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
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.
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
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
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
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
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
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
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
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
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 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
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
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
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
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
They’ll Catch Up On You
Taxes - And Your Online Business
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
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
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
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’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.