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 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’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.
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 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
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.
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