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Recession Survival – Do You Really Have to Pay Taxes?

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.

Before we talk about taxes and your online business, let’s discuss first why more and more people are getting attracted to starting their own online business.

Well, first of all, it is very hassle-free compared to having a business in the non-virtual world. You see, in online business, you only have to type and click for your business to boom.

Very minimal manual labor is needed in an online business and one can even get to work at home in their pajamas while managing their online business.

Now the question is: are online businessmen or entrepreneurs exempted from paying taxes? The answer is no. All individuals who are earning money online are required to pay taxes.

Sure, the government can’t possibly keep track of how much money each person generates online but then again, it’s one of the citizens’ responsibilities to go ahead and be responsible enough to pay for their taxes.

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.

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.

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.

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 or business), it is not required to collect sales tax from costumers in that certain state.

Copyright © Anne-Marie Ronsen

Publishers are free to use this article on an ezine or website, provided the article is reprinted in its entirety, including copyright and disclaimer, and ALL links remain intact and active.

Anne-Marie Ronsen is a well-established internet marketer & web marketing consultant. She work with clients all over the world to fill their business needs by reaching a targeted audience through proven internet marketing strategies.

Anne-Marie Ronsen is a well-established internet marketer & web marketing consultant. She work with clients all over the world to fill their business needs by reaching a targeted audience through proven internet marketing strategies.

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