Hello all, Just out of curiosity, as most of us online buy / sell using paypal etc. And then transfer the funds ( mostly ) to our Bank accounts / use it online. But when you as a seller get some funds and transfer it to your bank account , are you concerned about taxes ? do you pay them or what ? I know it might not come as a huge amount of money, but still, you are earning something, and it has to be taxed ( wondering paypal fee etc not to be any tax though ). And is someone out there already paying taxes for the FREELANCED / ONLINE income ( from SEO, coding, designing, etc ) One more thing, if you by any chance look forward to open a small online company ( designing / coding ) as a side business or something, how and where to register it ? fees etc ( I am not talking about those small portfolio websites though ) Looking out for some legal advice here Regards, CB
If you're earning over $600 per year you definitely need to claim it. You need to take all your banking transactions, paypal earnings, etc. and if you're not proficient enough to do it yourself, take the information to an accountant and they'll help you file correctly.
Hey Ian, Thanks for replying and the advice. I will consider it. PS: have added a few more lines in the post, please re-read and comment. Regards, CB
yes you should claim it so it doesn't come back and bite you on the backside down the road. I take all my statements to my accountant and let her do all the paperwork.
Hello SilentGround, Thanks for replying. So for that you have registered your self as an individual / company ? And any idea where to look for such people ? The Tax rates in general which are current ? How much you pay to the accountant ?
No one can answer you without stating which country you live in. In the US, you have to report ALL income as it is subject to income tax, both state and federal. The tax depends on your total net income, where you live, filing status etc. How much an account will charge depends on the accountant and what you want them to do. There is no such thing as a standard accountant charge.
If you are a freelancer and earning more than $500 a month than don't worry its depends on country rules i.e. in India we get 45% rebate if we do foreign exchange.
The US is like that as well actually. I believe the figure is $400 though but I don;t have a reference handy. I do hosting though and it's an actual business. Incorporated and everything.
mjewel has a very valid point. You need to state where you are. Taxes are particular to country, state, province, etc. That being said, in the US if your filing status is single and your gross income is under $8,950 in 2009 you are not required to file a tax return ie you will owe no federal income taxes. This does not mean that you will not owe taxes to the state that you live in. However you may still want to file in order to receive the earned income tax credit if you are of eligible age. That being said, if it is a sideline business, you already make taxable income and your buy/sell is adding additional income you need to report that income. You will pay tax on the income in excess of expenses.
Thanks for the replies friends. will just clear it, I live in India. Gotta have to check what's all this with Indian Govt. but if anyone over there has any idea about Indian Govt on this issue please let me know as well in PM / post here. Thanks again for the replies guys, MODS please do not close this topic, as I am seeking a few more replies ( possibly from Indian members as well ). Regards, CB
To further the discussion, ~CB~ would not have to pay the taxes (to US) as he is a non-resident right? W-8BEN?
Right now the best type of business entity to form would for most of us be a LLC (limited liability company) in Nevada. Nevada has no state tax so with everything said and done you would end up paying low federal taxes. Also you can have it set up with a privacy option. When your lawyer files for your EIN they don't use your Social Security number they can use theirs so even during a legal search using your Social Security number there will be no connection between you and the LLC. At the same time you remain in total control. Also many states have loopholes in their privacy policy which can gain access to an LLC or Corporation. Example California has over 300. Nevada has only one, intentional fraud and that must be proven first. This has only been done once in many decades. You can have a Nevada address, mail forwarding, even a bank account with privacy. It's unbelievable what you can do. Even Google and Microsoft are registered there. Plus the cost to set up your LLC is deductible. It has to be set up right though so make sure you use somebody that knows the proper set up. You can also move your corporation there or start a new one there and do business with the one you have in your state to eliminate it's profit and reduce taxes. There are many legal ways to work it. If you live in another country you can take advantage of this also. You can have a Nevada LLC. Nevada welcomes people from other countries to form their legal business entity.
Google and Microsoft are NOT Nevada corps. They are both incorporated in Delaware. The state you incorporate has nothing to do with the Federal taxes you pay. If you don't live in Nevada, you can still be required to register and pay state taxes, as well as minimum corporate tax. You also have to pay yourself a salary and Nevada requires you to pay unemployment taxes even if you are the sole shareholder. For most people, non-residents incorporating in Nevada will wind up with more costs vs. registering in your own state.
Every Fortune 100 corporation moved their corporations to Nevada. Microsoft moved 49 corporations from Delaware to Nevada. If you structure your LLC or Corporation right no self employment tax, no state Corporate income tax. The Federal tax is 15% of the Net, Guess it all depends who your lawyers are and what cpa firm you use. I have a Nevada entity and I have an office on South Eastern Ave in Las Vegas but I live in another state. I can be there or say here.
I live in nigeria and i do not pay tax. This is a tax free country. When i convert my money from dollar to naira, it is no huge that it makes me the hottest guy in my street.
In India if your earnings is more than $3500/year approx you pay tax. My earnings are not so high and so I dont at the moment!
All depends if the funds came from a business or private entity. If it comes from a business it's a bit harder to write off and easy to get caught for, if it's from a private entity i just write it off
I deal with people who thought they would save a few dollars not reporting certain amounts then have to come to me and pay me thousands when they get audited. I would say pay your taxes if you are a U.S. resident. And as a post above stated it doesn't matter where you incorporate the state you do business in requires an LLC or corporation doing business in that state to pay taxes. That being said there are many ways to structure your business in a tax efficient manner. Its just not as simple as incorporating in NV.