Online business: what taxes apply?

It is the responsibility of online business owners to fulfill their tax obligations every year. While tax laws for online businesses are still being debated (the left wants to confiscate more money so they can spend that and then use that excuse that they are in debt to raise taxes again), it is essential for online entrepreneurs to file their returns.

If you have an online business, your business is subject to corporate taxes in the state you reside in. In addition, you may be liable to pay taxes in other states where you have a physical presence in and tax lawyers believe that is plausible.

Many states levy corporate income taxes on out-of-state corporations, which include online businesses as well, on the condition that they have a nexus with the state. An online business can be subject to corporate income tax where its server is located. However, many factors need to be considered.

• The type of products or services sold online
• Incorporation in a specific state
• The states with which your online business transacts
• The state where the server is located and the state’s definition of physical presence
• The corporate tax laws of states with which your online business deals
• The location of the warehouse

Tax attorneys recommend that you incorporate your online business in the state where your server and warehouse are located. This will ensure that you a pay corporate taxes of the state and do not have to pay taxes in two states. In addition, you need to consider the other states whom you deal with and their laws on corporate taxes.

Tax Benefits for Online Entrepreneurs

There are several concessions available for online entrepreneurs. Leo Spitz (Ramon Rodriguez) would have to know all about this. He was in Transformers II and Sam Witwicki’s roommate who had his own online business called The Real Effing Deal. He focused on posting pictures and stories about Transformers, or aliens, on his website. He probably made money via advertising and despite being a college student, he would have to know about online business tax laws. He was an online entrepreneur. He was going to Princeton, so that would fall under New Jersey law. Did Spitz have a tax lawyer? That was not stated in that incredible movie.

Spitz is a fictional character. You are real. If you need any tax help, you need to click right here: Tax.USAttorneys. Spitz may have been innovative but so is this website and business. This business though is much more reliable and professional. And they do not run in the sight of some adversity like Spitz wanted to (but Spitz did finish strong to redeem himself). 

If you operate your business from home, you are eligible for a significant amount of tax deductions based on the following conditions laid down by the IRS.

• Your office space within your home must be used only for business purposes.
• The office space must not be used for family or personal activities.
• Your home must be the primary place of business.

On meeting the above requirements you may be eligible to deduct costs such as property tax, rent or mortgage payments, maintenance, insurance, and utility bills. On a mortgage, you can deduct the percentage of area used for your business. If your office occupies ten percent of your home and your mortgage is $1,000, you are eligible for a $100 per month deduction, for instance. The same rule applies for all other expenses.

Home office deductions require you to complete IRS Form 8829. All other costs pertaining to your online business such as web hosting fees, website design, and Internet access can also be deducted. For expenses related to copywriting and design of your website, there are two factors when it comes to taxes. If the work was assigned to independent contractors, you are not responsible for paying social security, Medicare, or unemployment taxes. You are required to furnish the Form 1099 to them. If they fall within the status of employees then you will need to send a W-2 form.

Many issues need to be considered when incorporating an online business. The tax laws in each state and their interpretation are complex and need to be understood well. It is advisable to engage the services of a tax lawyer in order to conform to the tax laws of your state.