October 22, 2010
Tax Help Relief - Do I Really Need A Business License And Tax ID?
I’ve received quite several emails lately from ebusiness owners who seem to think that just because their business is conducted on the internet or from the comfort of home that the rules and regulations that govern brick and mortar businesses don’t apply to them.
The ebusiness questions I receive frequently do not include building websites or conducting ecommerce.
They’re more what I name the “Do I really Have To” line of questions, for example:
“Do I really have to obtain a business license?”
“Do I really have to get a tax ID number?”
“Do I really have to pay taxes on income from my website?”
Yes, yes, and yes.
Do I really have to get a business license? This is one prerequisite that several ebusiness entrepreneurs think they can skirt simply because they don’t have a brick and mortar establishment.
Sorry Charlie. Running an ebusiness out of your office or out of your home doesn’t get you free when it comes to licensing.
Based on your location, you might need a city and county license.
Luckily, such licenses are relatively easy to get and are not expensive. For local licensing requirements, talk to your city or county government offices.
Home businesses are likewise subject to zoning laws that regulate how property can be used and may restrict various activities. You should check local zoning requirements and property covenants.
You can find this information at the court house or by calling your local license department.
Legalities aside, the best reason to get a business license is it permits you to establish a business bank account using what’s known as a DBA.
“DBA” stands for “doing business as.”
A DBA is yet another name that you simply use in the operation of your business rather than your personal name. For example your name might be Joe Jones, but you might use “Jones Internet Services” as your business name. Having a business license will allow you to set up a business account and get checks printed with your business name, giving you that all essential air of professionalism that many ebusinesses lack.
Do I really have to get a tax ID number? Online companies with a physical presence, or nexus, in a state are required to collect and report taxes on sales of taxable goods made to customers living in that same state.
For instance, if your online business is based in California, you must collect and report sales tax derived from fellow Californians making purchases on your website.
For this reason, you’ll be expected to have got a tax ID number if you are selling taxable items (most services aren’t taxed).
Getting a tax ID number is generally a simple process of filling out a form and paying a nominal fee. You will file quarterly reports and remit any sales tax that is due.
One word of warning: many entrepreneurs have gotten themselves into deep trouble because they saw fit to spend the sales tax they had collected instead of sending it to Uncle Sam. This can indicate death to your business and jail time for you. Often times, this mistake is innocently made when a business owner comingles funds collected as sales tax with their normal business checking account.
Open a separate bank account and deposit sales tax monies into the account and don’t touch it till the time comes to send the money in with the quarterly report.
Do I really have to pay taxes on income from my web site? We have discussed this before and the answer is still the same: Just because your income is derived from an ebusiness doesn’t mean that the income isn’t taxable.
It is not manna from Heaven. It is income, so report it.
The point to keep in mind is this: the “e” on the front of “e-business” does not stand for “exempt.”
In the eyes of the law, your ebusiness is prone to similar laws and regulations that govern the corner mom and pop, thus make sure you conduct your business as such.
If you want more information on Tax Help, don’t read just rehashed articles online to avoid getting ripped off.
Go here: Tax Help Relief

















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