Perhaps the most common misconceptions about taxes and
your online business is that the two are not related
to each other. Most people think that online
businesses are not really taxed that’s why more and
more people are becoming attracted to start their very
own online business.
If you are one of the many people who is interested in
starting your own online business or if you already
have an online business of your own, then for sure you
have heard about the controversies about online
businesses and taxes.
Most people who don’t really have a stable background
about online businesses and taxes would most probably
guess that owners of online businesses are able to be
exempted from paying taxes.
However, in reality, online businesses are still
covered with tax dues.
“But I Am Working At Home”
And Other Lame Excuses Not To Pay Taxes
The most common excuse of people who have online
businesses who wish to ditch paying taxes is that they
are “working at home”. What most people don’t realize
is that taxes are actually based on the sources and
amount of the income as well as the types of services
and products sold; not on the location of the
So whether you are working at home, in a store or in a
warehouse, you are still obliged to pay for whatever
tax is due to you.
Internet Tax Is Just Like Any Business Tax Basically,
online businesses are taxed just like any other
business. The government does not actually collect
income taxes based on how a business operates but
instead, it focuses on the form of the business.
A business based on the Internet still has to register
for GST and PST (if applicable) just like any other
business. Whether your online business is a sole
proprietorship or incorporated, you will still need to
fill up some important forms so that your online
business can be deemed as legal and so that you can
pay the proper taxes regularly.
There is actually no big difference between the tax
responsibility of an online business and any other
Online Businesses And Federal Taxes
If you have an online business and you are wondering
if you still need to pay federal taxes, the answer is
yes. But before you go around and complain about the
unfairness of the world, you might as well learn more
about the federal taxes that you need to pay.
If you are a sole proprietor of an online business,
any income you earn through your online business will
be taxed as income on your PTR or personal tax return.
In addition to that, you are also obliged to pay your
portion of social security and medicare taxes using
However, if you have incorporated your business, the
way of paying taxes will become slightly different
compared to when you are the sole proprietor of your
Sometimes, the tax you pay as an incorporated online
business will also depend on the kind of organization.
It’s either you will pay tax at a corporate level or
it will be passed down to you as an income.
Dealing with an taxes and your online business can be
quite an ordeal if done alone so it would be much
better if you’d contact experts regarding this matter
such as a lawyer or a certified public accountant.