Your Questions About How To Do Business Taxes Online
William asks…
how would starting an online business affect my tax and national insurance?
i’m thinking of starting an online business, selling goods over the internet.i will initially be doing it part time as i already have a job, untill (and if) i make enough to do it full time. how would this affect my tax and national insurance? would i pay tax from my wages from work and the tax from my earnings from my business seperatley?
Jere answers:
All UK citizens get a tax-free personal allowance of £6475, and the UK tax year goes from 6th April to 5th April. Your personal allowance will now be at your job, and it is likely that this will continue, although you can have it against self-employed earnings if you wish. That would mean you would get a straight 20% deduction from salary, and most people prefer to leave tax allowance at job. Yes, if your earnings were over £6475, you will still get PAYE tax deductions from work. You would also have to fill in an annual Tax Return with employed and self-employed pages. Self-employed people pay tax by 31st January and 31st July each year, although that is over-simplifying the system, which can be complicated. You can check it out on http://www.hmrc.gov.uk , then into self-employed if you want to look further. You will pay a straight 20% tax on your self-employed earnings, could even go up to 40% if earnings large enough. Yes, tax is paid separately, deducted by employer on earnings, and paid direct to HMRC on self-employment, but after Tax Return processed, you get a statement which shows it all, and with the credit from wages deductions. If for any reason tax at job is over or under-deducted, adjustment is made with tax on self-employment, or if wages are high enough, self-employed tax can be collected through wages if Tax Return done in time.
Employed people get a Class 1 NIC deduction at job. Self-employed people have to pay a weekly Class 2 flat-rate by direct debit (although if earnings low, you can get a small earnings exemption). They also can get charged Class 4, which is based on amount of self-employed earnings if high enough. You can look at that on http://www.hmrc.gov.uk/rates .
Paul asks…
taxes for an online business not selling physical products?
i want to start a website that acts as a middle man..where people pay to use my site to list their property, and others can search the site and browse through these properties. so the only money made by me would be through people purchasing a membership to my site. because this is not a brick and mortar company, and im not selling any physical products or shipping anything, how do taxes work for me? does a sales tax still exist? i was reading through sba.gov but some things are still unclear. also, im living in germany at the moment…i plan on moving back to the states next year but i want to start this company before that. but legally im only allowed to make money in germany as an english teacher. but having an online company…it’s not technically making money in germany right? i’m completely clueless about this and im doing lots of reading but any help is much appreciated…im expecting to have to talk to a lawyer about technical stuff very soon too… anyways thanks!
Jere answers:
Since you are living in Germany and the entire business is operated in Germany. My guess is it’s a German business. If you were from Germany but living in the US and doing this from the US, the US would consider it a US based company.
Sales tax is operated by each State. The states each have their own rules; I’m not familiar with one that charges sales tax on services.
However, I don’t think there is a need for your business. I can go on many different websites and see the MLS listings for free. All houses listed with a realtor will have an MLS number and many privates one too if they are going through the do it yourself home selling groups.
For office/industrial properties there are less online sources but there is loopnet and that is a free for most of the information.
Lisa asks…
How do I file taxes for my online business?
I sell things online. I wouldn’t say I run an online business, because I’ve only made five sales, but I would like to turn it into one. I save all my receipts and keep all of my expenses and profits on record, but I’m not sure how to turn this into anything at tax time. I don’t have a business license, seller’s permit, EIN, or anything like that because I can’t figure out what I need for something this small scale. To get this in line legally, where do I go from here?
Jere answers:
You file a 1040 Schedule C business and fill out schedule SE to figure your self employment taxes. You use your own Social Security number. You are running a sole proprietor business. You don’t have to have an EIN unless you have employees.
Sandy asks…
How could I prepare tax 2009 for my online business?
How could I prepare tax 2009 for my Online Business?
This is the first time that I want to prepare tax (2009) for my online business in illinois. I have not received w-2, w-3, or w-4 forms…I have not applied form 1065, yet… what should I do?
Jere answers:
I’d suggest taking your records to a tax professional at least for the first year.
You won’t receive the w-whatever forms. There’s a slight chance you might get a 1099-misc, but probably not. You file from your own records – you DID keep records of all of your sales and related expenses, didn’t you?
You’ll use form 1040, with schedules C or C-EZ, and schedule SE.
The above is for federal. You’ll also have to file a state return.
George asks…
Online business tax question.?
I am trying to start an online businees. Do I have to open a corporation to write off my online business expense? How does the tax work if I make income with an online business?
Jere answers:
NOT NECESSARILY, COULD USE A SCHEDULE-C. THEY WILL SEND YOU A 1099-MISC.
ANTHONY, CPA
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