Legal and Tax Strategies: Safeguarding Yourself and Your Assets for Online Retailers
Legal and Tax Strategies: Safeguarding Yourself and Your Assets for Online Retailers
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It's crucial to keep in mind that an eBiz is a real business and to treat it like any other when you first start one. Don't just go right in and begin selling. To safeguard your money, take into account all the legal considerations, including your obligations and the risks you are taking.
Is Online Tax Charging Necessary?
It is your duty as an internet business owner to be up to date on tax regulations that may affect you. It is your duty as a retailer to be aware of t...
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It's crucial to keep in mind that an eBiz is a real business and to treat it like any other when you first start one. Don't just go right in and begin selling. To safeguard your money, take into account all the legal considerations, including your obligations and the risks you are taking.
Is Online Tax Charging Necessary?
It is your duty as an internet business owner to be up to date on tax regulations that may affect you. It is your responsibility as a business to be aware of the regulations governing state sales tax collection and payment.
"The collection of sales tax for items sold over the internet is only required if the business has a physical presence in that state," states CPA Jim Reed of Teton Tax (http://www.tetontax.com). Put otherwise, if you own a home-based candle business in Oregon and you sell a Portland-based consumer a box of votive candle holders, you will have to charge them sales tax.
On the other hand, you can offer your customer a lesser price if you sell a candelabrum to them in Texas, where your company does not have a physical location, as you are not required to charge sales tax. This may result in significant savings on upscale goods and provide your e-business with a competitive edge over out-of-state brick and mortar retailers.
You are accountable for collecting sales tax and transferring the proceeds to the government. You must file a tax return in the majority of states, usually once a month. "Once you obtain a sales tax license, you're required to fill that out whether you have sales or not," Reed states. Based on the amount of taxes collected during that time, each state has its own sales tax form that needs to be filled out, signed, and submitted in order for the tax to be sent.
Which Business Structure Is the Best?
Selecting the structure for your e-business is another legal consideration. The way your company is set up can either protect you legally or expose your assets:
• Sole Proprietorships: To save money on incorporation fees, a lot of online business entrepreneurs choose to operate as sole proprietorships. But in a lawsuit, this kind of framework exposes your private property. Everything is subject to a lawsuit, including your personal bank accounts, house, and vehicle.
• A Corporation or an LLC: Getting your business incorporated is similar to purchasing personal asset insurance. Only corporate property is at danger in the event that your business is sued. There aren't many costs involved in forming a corporation or LLC.
Regardless of the structure you choose for your company, it's wise to speak with a CPA and an attorney to ensure that everything is legal and that your firm is set up to maximize your benefits.
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