(Taxes Exist Online?!)
So, you want to start your own online business? Before
you start designing your own website or webpage, make
sure that you know all about the do’s and don’t of
starting an online business and that includes the
technical, financial and legal matters of the
When you decide to start a business, you should be
aware and prepared for whatever legal or financial
issues that may arise. If you think that you can
escape from paying taxes by starting your very own
online business, think again – your dreamy balloon may
burst once you get into complications regarding taxes
and your online business.
The Truth About The Internet Being A Tax-Free Zone
More and more shoppers are getting lured by online
shops and retailers because of their famous tag line
of “no-tax shopping”. What most people don’t know is
that that certain tag line used to lure online
shoppers is not applicable to all states.
For you to be able to understand this concept better,
here is an example: A woman from Indiana regularly
purchases exotic orchids through an online shop based
Since she purchases and sends her payments directly to
Switzerland, she is not obliged to pay any sales tax
in Indiana since her orchid supplier has all of its
facilities in Switzerland.
A few months later, the exotic orchid supplier of that
woman has decided to open a store in Indiana. The
woman still purchases online but she already has to
pay for the sales tax of the orchid since there is
already a store based in the place where she is
In other words, the responsibility to pay for taxes is
an interdependent status between the consumer and the
supplier. By that example, we can Come to a conclusion
that the Internet is not really a tax-free zone. It
depends on the location as well as the type of
business that one is involved in.
The Responsibility To Pay Sales Tax
Admit it, nobody really loves to pay taxes. Perhaps
even the rich people are irritated come tax-paying
time because it is sometimes a tedious and complicated
process. There are a lot of rules and laws to refer to
before one can actually come to a clean calculation of
the taxes that he or she must pay.
If an individual lives in a state that is known for
collecting “sales tax”, you are not exempted from it
even though you try to escape it by making a lot of
purchasing through the Internet because you are still
required to pay for the “sales tax” directly to the
When you pay a “sales tax” directly to the state, it
is no longer called a “Sales tax” but rather a “use”
tax. Perhaps the only difference between “sales” tax
and “use” tax boils down as to which person – the
buyer or the seller – pays the state. “Use” taxes are
usually used by the state to make sure that they
collect the right amount of revenue on every taxable
item purchased within the state borders.
There are actually still a lot of points to be
discussed about taxes and online business and the
points mentioned here are just what we may call “a tip
of the iceberg”.
In determining what’s the right thing to do in
handling taxes and your online business, it would be
best to go beyond researching for legal answers alone.
Consulting the help of lawyers and other legal
professionals would probably benefit you more than you