Taxes and online ecommerce. Do we pay taxes?

Can someone help. I just started an online women's lingerie and bikini shop. I did have to register for a business license, which means I have to file my earnings every month. Does anyone know how this works. What happens if you make no money for a year. Or whats happens if you do make money? How does the tax thing work?

 

Whatr country are you in? If you are in the U.S., what state are you in?

I have an ecommerce website that is based in Rhode Island. I likewise had to get a retailer's license so that I could sell to consumers. I have to collect sales tax from purchasers who buy from a state in which I have an office or other physical presence (for me, that is just RI.) I have to send in the sales tax receipts at the end of every quarter, but not monthly. Once per year (due to my fiscal year, it is in February for me) my business also has to file income tax returns with both the state of RI and the federal government. If I made a profit, I will have to pay corporate taxes on it. If I do not make a profit, I have a loss that I can carry over to next year. One exception: RI has an alternative minimum tax, so even if I lose money in any particular year, I have to send them about $500. I know that Massachusetts has an alternative minimum tax, as well.

Welcome to the bureaucracy and regulations of the government.

 

Hi Jrbiz,
I'm located in Arizona. Thanks for that explanation. Sound like RI is more complex. I have made any money yet so every month when I file I just put zero income made. I do understand I have to charge 8.2% on local residents. I'm just confused how this works with ecommerce. I heard that you if you sell online you don't charge your customers taxes.

 

If you sell online to people living where your business is incorporated or has been issued sales tax certificate than you have to file sales tax with FTB i believe.

I live in california, here the sales tax is 8.250% so lets just say if I am selling to someone in New York, I am not going to charge sales tax but if I am selling to a resident of california, I have to charge sales tax.

 

Hi See that makes sense. So if you don't make any money for a year do you still have to file at the end of the year?

 

I believe that all businesses must file their fedral taxes annually, but I could be mistaken. You certainly need to talk to someone familiar with Arizona's tax laws to be sure about state filings and any alternative minimum taxes that you might owe.

There is potentially another reason to file your taxes each year, even if you had a losing year: you can then apply those losses to ensuing years in which you may make a profit. You want to get those losses 'on the books' so to speak.

 

In Ma you have to file for sales tax every month, even if you don't sell.

That's 5% within the 20th day of the following month.

It can be done online very very easily.

Don't know about income taxes since we have someone that takes care of that.

But I think that you don't have to in NH, if you have very little or no income.

 

Unfortunately in the U.S. we have to pay taxes on all income, no matter where it comes from

 

In the US, if you have an online biz, you are supposed to charge sales tax in ANY state that you have a physical presence. If you are located all in one state, then just that state. If you have offices/warehouses/etc. in several states, you are supposed to charge tax in those states. Also, what types of items you sell may or may not be taxable depending on the state.

These taxes are reported on whatever schedule the state requires- every month, quarterly or semi annually. You usually have to record how much you brought in and how much tax you collected on the taxable portion (taxable items), and then pay that tax amount. If you brought in nothing, then you pay no tax, but you still have to file or request a file exemption if you sell non-taxable goods (like foods).

At the end of the year, you must file your income taxes. (This in NOT sales taxes.) There is also a federal restriction on how many years you can file a loss and still claim it and get money back. I believe, the last time I checked, that you have to claim a profit in at least 4 out of 7 years, or your "business" is only considered a "hobby" and you no longer can claim losses.

Jim

 

Jim, That was very informative. Thanks so much. I have to admit I did more research on the ecommerce side then the tax side. I have to file earnings monthly and I have not made any money so I always put zero earnings. So what happens if I never report anything at the end of year?

 

One more thing: in RI, anyway, I have to charge sales tax not only on just the cost of the product but on the cost for shipping, as well. You may want to check AZ sales tax law on this issue, as well.

 

At the end of the year...I assume you mean your yearly tax returns....You do not put anything about Sales and Use Taxes on your yearly tax returns. That is just for profit/expenses. Sales tax is neither. All Sales and Use Taxes are taken care of when you do your regular filing of these taxes.

Jim