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 | Article category: Ecommerce
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Ecommerce InformationThe "e" In eBusiness Makes Not Mean Exempt
by:
Tim Knox
I've gotten quite a few emails recently from ebusiness owners who seem to think that simply because their business is conducted online or from the comfort of home that the rules and regulations that govern brick and mortar businesses do not apply to them.
The ebusiness questions I get most often do not involve building websites or conducting ecommerce.
They are much what I call the "Do I Actually Have To" line of questions, such as:
"Do I actually have to get a business license?"
"Do I actually have to get a tax ID number?"
"Do I actually have to pay taxes on financial gain
from my website?"
Yes, yes, and yes.
Do I actually have to get a business license? This is one requirement that many an ebusiness entrepreneurs think they can skirt because they don't have a brick and mortar establishment.
Sorry Charlie. Operative
an ebusiness out of your office or out of your home makes not get you off the hook once
it comes to licensing.
Depending on your location you may need a city and county license.
Luckily, such licenses are comparatively
easy to receive and are not expensive. For local licensing requirements, contact your city or county government offices.
Home businesses are likewise subject to partitioning laws that regulate how property can be used and may restrict various activities. You should check local partitioning requirements and property covenants.
You can find this information at the court home or by job your local license department.
Legalities aside, the better reason to get a business license is it allows you to set up a business bank account victimisation what's called a DBA.
"DBA" stands for "doing business as."
A DBA is another name that you use in the operation of your business instead of your personal name. For example your name strength
be Joe Jones, but you strength
use "Jones Net
Services" as your business name. Having a business license wish modify
you to set up a business account and get checks written
with your business name, giving you that all important air of expertness that many an ebusinesses lack.
Do I actually have to get a tax ID number? Online companies with a physical presence, or nexus, in a state are required to collect and report taxes on sales of nonexempt goods ready-made to customers living inside
that same state.
For example, if your online business is based in California, you must collect and report sales tax derived from fellow Californians production
purchases on your site.
For this reason you wish be required to have a tax ID number if you're commercialism nonexempt goods (most services are not taxed).
Getting a tax ID number is ordinarily a simple process of filling out a form and paying a nominal fee. You wish file quarterly reports and remit any sales tax that is due.
One word of warning: many an entrepreneurs have gotten themselves into deep trouble because they saw fit to spend the sales tax they had collected instead of causing it to Uncle Sam. This can mean death to your business and jail time for you. Many an times this mistake is innocently ready-made once
a business owner comingles funds collected as sales tax with their normal business checking account.
Open a separate bank account and deposit sales tax monies into the account and do not touch it until the time comes to send the money in with the quarterly report.
Do I actually have to pay taxes on financial gain
from my website? We've talked simply about this before and the answer is still the same: Simply because your financial gain
is derived from an ebusiness makes not mean that the financial gain
is not taxable.
It's not manna from Heaven. It's financial gain
so report it.
The point to remember is this: the "e" on the front of "e-business" makes not stand for "exempt."
In the eyes of the law your ebusiness is susceptible to the same laws and regulations that govern the corner mom and pop, so do sure you conduct your business as such.
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