Taxes

Hi Everyone,
Okay so I am very confused about how taxes are supposed to work for internet services and digital goods. I live in the US and if I am not mistaken, we still have to pay sales tax on everything we sell whether it be a service or a digital good? How much should I take out for taxes when I am writing a sales copy/articles/etc. and what should I do about the for the things I sell on my PLR website? Just want to make sure that I get off on the right foot with my business. Any advice or resources would be wonderful!
Thanks,
Kayla

 

If you are referring to sales tax, then at this time, you only need to collect taxes on items you sell within the state(s) you operate out of (and incluse any local adjustments as well). Since you most likely do not have office in other states, it is most likely only the state you live in (though I am making an assumption regarding the size of your business). If you have other writers that work for you, that could be tricky depending on exactly how theyy are sold and who owns the rights at the time you sell them. In other states, the person buying will be required to pay the tax, not you. Congress has talked about changing that, but surrently a staate cannot make an online or mail-order business collect sales tax unless the business has a presence in the same state as the purchaser. If they doo live in your state, the amount can vary. There is the state sales tax rate and then the local adjustment for the county. The local rates are set by each county. To find them, you can use an app like zip2tax (I am not promoting the app per se as I have not used it, it just came up first in search results), many shopping carts have it built in, or try to find a tax map on your state website.

 

Besides sales tax, you need to think about income taxes, both state and federal. One of the traps that many new business owners fall into is the idea that because they just made $3000 in the last month, they made $3000 that they can spend. Depending on how successful you are and your location, you might need to put aside 30 to 40% of every dollar you earn for taxes. I'd suggest that you think about how much money you think you might make and talk to an accountant or tax advisor in your state about getting a rough estimate about the tax "take." In that way you can put some of your money aside in a savings account until you need to pay it to the tax man.

 

Kayshaw,

Taxes vary by state and even city. You’ll need to specify where you are.

However, in general, you will need to collect sales tax on most goods. Services – that is a different ball game depending on your state.

Also, depending on how much your previous year’s taxes were you may need to make quarterly payments to the IRS and or your State DOR

 

Sales taxes can vary even by tax lot in cities in some states.

 

For USA sales tax currently you only have to collect for sales tax if the DELIVERY address is within your state. So if your from CA and your Customer is from CA but you are shipping to NY you do NOT have to charge them sales tax.

 

Not entirely correct. If you have a business presence in another state, you must collect sales tax for deliveries in that state in addition to your home state.

Also, not all states have sales tax, so in that case you do not collect in your home state, but you still may need to collect in one or more other states if you have a business presence in those states.

 

Sales tax differs state by state, my state for instance(VA) you don't need to pay sales taxes on digital goods. Taxes are pretty confusing them, i'm still trying to figure them out.