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Online business tax question.?

Question: Online business tax question.?

(Posted by: Dan M on 2007-03-21 07:45:51)

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?


Answers:

Posted by: Wychdr on 2007-03-21, 07:57:17

NOT NECESSARILY, COULD USE A SCHEDULE-C. THEY WILL SEND YOU A 1099-MISC. ANTHONY, CPA

  

Posted by: GrandMamma on 2007-03-21, 08:35:46

I live in NJ and have a online store for a few years. For income tax purposes you use Schedule C, not necessarily you will get a 1099. Income generated by your business will pass through to you as regular income/ earnings for tax purposes (i.e. as a sole propiertorship). Your expenses related to business can be deducted, but under your regular deductions, as you are not a separate entitity I did not create an LLC (very popular now) until this year, as I would like to sell food products. At the beginning, you can work your online store with a DBA name (doing business as). First you register your name with your Country Clerk, then you can open even a DBA bank account, If you do not have anything for sale that could potentially generate a lawsuit (food, etc), you may work this way for many years. Remember only that you must pay sales tax for deliveries within your state. One way to avoid this, at the beginning of your business, is not to offer delivery within your state, so you are abiding by the law. Keep accurate records. The advantage of getting your bank account, is that will be easier to accept payments through a card processor, which will deposit credit card payments (minus their commission) directly into your account. Good Luck!

  

Posted by: T Davis on 2007-03-21, 18:21:24

No, you do not have to as is indicated by the first two answers you received. However, it sure does make things go a lot smoother for tax purposes, deductions, etc… For one thing, it shows the public, county, state, IRS, and everyone else that you aren’t just a hobbiest, and that you’re in it for the long run to make a profit and to grow. establishing yourself as a business/ corporation is fairly easy and inexpensive… which you can do without a lawyer. I personally established my corporation in Delaware without a lawyer using Ted Nicholas Book, and it was very easy. Bottom line is that things go a lot smoother and more opportunities and advantages are available to you when you incorporate.

  

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