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.
Most people also believe that transacting small sidelines or business transactions through the Internet requires no tax. However, the truth of the matter is, there are actually taxes that are due for every item purchased or sold through the Internet.
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 taxes.
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.
However, agents from IRS would say that whether it is treated as a hobby or a sideline business, taxes should be strictly implemented.
You should also ask what is required at both state and federal levels. Most communities would actually require you to register a trade name. If you wish or choose to operate from your home, you should ask about the local zoning laws.
Your online business will more or less fall under the category of a mail order business (that is if you are planning to sell stuffs online). You will need to learn about the sales tax requirements that come along with your online business so that you will not encounter any problems in the future.
If you have your so-called online business, you should be aware of the rules of the IRS: one is required to pay taxes on all business and personal income and that includes the dough you make selling stuffs on the Internet.As heartbreaking as this may sound, even the simplest business transaction made through the Internet needs to be reported as "income".
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.
Realistically speaking, if you don?t treat eBay as a serious and constant venue for your online business, then perhaps you can get away with selling a few items every now and then without having to worry about the IRS tracking you down with their questions about tax dues and other stuffs.
In a nutshell, trying to start and operate an online business requires ample time, effort, honesty and sincerity. It?s a sad fact that a lot of people use the Internet for scamming others and earning money illegally.
If the answer to all those questions are yes, then you most definitely are not carrying a hobby, but in fact a business. By finding out that you are already having a mini-online business at eBay or other similar websites, then you have to be responsible enough to pay for your taxes on your income.
Most people also believe that transacting small sidelines or business transactions through the Internet requires no tax. However, the truth of the matter is, there are actually taxes that are due for every item purchased or sold through the Internet.
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 taxes.
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.
However, agents from IRS would say that whether it is treated as a hobby or a sideline business, taxes should be strictly implemented.
You should also ask what is required at both state and federal levels. Most communities would actually require you to register a trade name. If you wish or choose to operate from your home, you should ask about the local zoning laws.
Your online business will more or less fall under the category of a mail order business (that is if you are planning to sell stuffs online). You will need to learn about the sales tax requirements that come along with your online business so that you will not encounter any problems in the future.
If you have your so-called online business, you should be aware of the rules of the IRS: one is required to pay taxes on all business and personal income and that includes the dough you make selling stuffs on the Internet.As heartbreaking as this may sound, even the simplest business transaction made through the Internet needs to be reported as "income".
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.
Realistically speaking, if you don?t treat eBay as a serious and constant venue for your online business, then perhaps you can get away with selling a few items every now and then without having to worry about the IRS tracking you down with their questions about tax dues and other stuffs.
In a nutshell, trying to start and operate an online business requires ample time, effort, honesty and sincerity. It?s a sad fact that a lot of people use the Internet for scamming others and earning money illegally.
If the answer to all those questions are yes, then you most definitely are not carrying a hobby, but in fact a business. By finding out that you are already having a mini-online business at eBay or other similar websites, then you have to be responsible enough to pay for your taxes on your income.
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