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Your Quick Guide To Safe-guarding Your Business By Paying Online Taxes
By Arthur Manford Chambers III
Charging online when taking orders is a special concern for businesses that sell products through the internet. Knowing when to charge a customer sales tax and how much is vital to their business. Not only can these tax charges help a business pay their own taxes, but quite often, it's required by law that you charge them in order to return the to the government.
So, how do you know if your business qualifies for charging clients online taxes? This is actually very easy. If your business has a physical location in the same state as the person who is buying from you, they will have to pay whatever the sales tax is for that particular state. For example, if your business warehouse is in California, and your buyer is from California, they will be required to pay a sales tax.
But if the buyer isn't from California, they do not have to pay sales taxes. However, this process is probably going to change as the number of online sales increases and more and more money is made from online businesses. The government isn't quite able to get all the money that is being made from online buyers at this point, but they are looking for ways to begin to tap the online retailers for a percentage of their profits.
That said, if you have purchased products online and you have not been charged sales tax on them, even though you were supposed to, the IRS can still require you to pay this full sales tax amount. While this is not very likely, if you are a big business that is buying items for your business online – and then not paying sales – you might possibly get a note from the IRS in the future, in regards to the fact that you
have not payed what you should in online taxes.
If you're not certain of what category you fall into when it comes to online taxes, you might want to keep track of receipts of purchases that might require sales tax to be paid in the future, just in case. That way, you will be sure of whether or not the amount the IRS is giving you is right and be sure of how much you are being taxed is correct.
Charging online is also tricky because you need to be certain that the individual who is ordering from you is actually in the place where they say they are. To do this, you might want to come up with identification verification system, the same as you would do with the credit card verification and authorization. Be sure that the credit card and the billing address are a match and that you are shipping ONLY to the billing address, unless it's labeled as a gift.
Steps are being put into place to insure that the government is getting a piece of what businesses are selling online. Make sure that you are charging the right amount in sales tax to eliminate any problems with the government in the future as they come up with ways of making sure you are paying online taxes. Arthur Manford Chambers III is a tax and financial planner who enjoys sharing tips on online taxes and offers extensive free tax guides, and a free "special report" on taxes. Plus you can download the author's new tax guide handbook on his website www.taxesandtax.com
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