When you open an eBiz, it’s essential you remember that it truly is a business and approach it as you would to any other business. Do not just jump in and start selling. Consider all the legalmatters—your responsibilities and the risks you are assuming—so as to safe-guard your investments.

Do I Have to Charge Taxes Online?

If you are running an internet company, it is your duty to keep current on tax laws that have an effect on you. As a retailer, you are obligated to know the laws regarding both the collection and payment of state sales taxes.

Based on CPA Jim Reed, of Teton Tax (http://www.tetontax.com), “The collection of sales tax for items sold over the internet is only required if the business has a physical presence in that state.” Quite simply, if you run a home-based candle business in Oregon and you sell a box of votive candle holders to a client in Portland, you’ll have to charge them sales tax.

If, nevertheless, you sell a candelabrum to a client in Texas, where your business has no physical presence, you do not need to charge sales tax, therefore you’re able to provide your customer with a reduced price. This can add up to substantial savings on high-end purchases and give your eBiz a competitive advantage over out-of-state brick-and-mortar stores.

Along with charging sales tax, you are also responsible for passing that money on to the government. In most states, you’ll need to fill out a tax return, generally once a month. States Reed, “You’re required to fill that out, whether you have sales or not, as soon as you acquire a sales tax license. Each state has its own sales tax form to be completed, signed, and filed, and the tax remitted, based on what taxes have been collected during that period.”

What is the best Method to Structure My Business?

Another legal aspect of starting a eBiz is choosing how you would like to structure it. The way you structure your business can afford you legal protection, or leave your assets exposed:

• Sole Proprietorships—Many e-business owners set themselves up as sole proprietorships to steer clear of the costs of incorporating. However, this type of structure leaves your personal property vulnerable in a lawsuit. A plaintiff can go after everything—your home, your personal bank accounts, your car.

• A Corporation or an LLC—Incorporating your business is like obtaining an insurance policy for your personal assets. If your company is sued, simply what belongs to the corporation is at risk. The fees associated with setting up a corporation or an LLC are fairly minimal.

Regardless of how you choose to create your business, it is at all times a good idea to seek advice from a CPA and an attorney to make certain you’re legally squared away and establish in the manner that most benefits you.

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