Taxes – And Your Online Business
(They’ll Catch Up On You)
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.