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. Many states in America now oblige certain online or e-commerce businesses to pay and collect sales 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 you are residing in a state that requires you to pay taxes.
The changes to be implemented are the result of laws passed since 2007. The state laws changed 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’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 career as an online businessman/woman, try to be as clean and honest as you can with your taxes and your online business.