More and more people are drawn to the thought of running an internet business through the perception that whatever income attained on the internet will be exempt from taxation. This regrettably is a prevalent disbelief in view that those who own internet businesses are still required to pay their tax dues.
In reality there's been considerable controversy behind internet businesses and taxation leaving many of the entrepreneurs who begun their online businesses with this false perception wishing they had done their due diligence before starting out.
"But I Am Working At Home"
And Other Pointless Excuses Not To Pay Taxes
With an influx of individuals now working in the comfort of home and receiving earnings from their online endeavors the obvious pretext is that given that they acquired the income at home they don't have to pay taxes. These people fail to realize that taxes are actually centered on the sources and quantity of the income in addition to the kinds of products and services sold; not on the location of the business.
With that in mind you should fully grasp that you are certainly required to pay your tax dues even when you earned it online.
Internet Tax is paid in the same manner every other business pays tax. As a matter of fact the government does not collect income taxes based on how a business works but rather it concentrates on the type of business.
If your business is based on the Internet you still have to register for GST and PST (if appropriate) the same as any other business. Based on the framework of the enterprise, sole proprietorship or incorporated, you'll still need to fill out the required documents so that your online business could be deemed as legal and so that you can pay the proper taxes regularly.
There is really no big difference between the tax responsibility of an online business and any other business.
Online Businesses And Federal Taxes
Even when you operate an online business you are still required to pay federal taxes. It may seem unfair to you but it is crucial that you understand this upfront rather than find out at a later point that you owe money to the IRS. The federal taxes that you need to pay will vary according to your business framework.
If your business is set up as a sole proprietor for an online business any revenue you earn through your online business is going to be taxed as income on your PTR or personal tax return.
Aside from that you will need to pay for your part of social security and medicare taxes using schedule SE.
On the other hand in case you have incorporated your business the tax schedule will be very distinct from a sole proprietor of an online business.
At times, the tax you have to pay as an incorporated online business will also depend on the kind of business. You'll either pay tax at a corporate level or it will be handed down to you as an income.
Mastering taxes as it applies to your online business can be quite perplexing but it is critical to get a picture of what is needed that allows you to minimize complications down the line. You might want to seek professional advice from a lawyer or public accountant if you're not 100 % certain what taxes are required for your online business.
Obtain free access to a List of Business Tax Deductions and get answers to pressing questions concerning business tax filing