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 business. 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. There is actually no big difference between the tax responsibility of an online business and any other business.
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. 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. 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 online business.
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 taxes and your online business can be quite an ordeal if done alone so it would be much better if you contact experts regarding this matter such as a lawyer or a certified public accountant.
For more information on Self-Employed taxation, visit IRS.gov.