Taxs

[crates]

I know ecommerce business are not subject to state sells tax.
BUT...
do they have to file taxs with the IRS (like due in April)?

[benson712]

I believe in most states, e-commerce businesses are liable for state sales tax for products they ship within the state. In regards to federal taxes, it all depends on the business structure. If it is a sole-proprietorship then you would have to complete a Schedule C in addition to your standard individual income tax return. LLC's and corporations have more complicated taxation that an accountant would better understand.

[JPnyc]

I thought it you owned your own business you had to file quarterly?

[benson712]

That's true, you may have to file a quarterly federal withholding with the IRS. This is the equivalent of a company taking taxes off of every paycheck except a sole proprietor has to pay both the employer and employee share of the tax.

[bhagood123]

This is a "gray area" for the most part. It would be a good idea to consult a CPA, preferably a CPA with an ecommerce background. I am not a CPA, however I talked to a few in the past and this is my understanding:

- If the item is shipped within the same state, you must charge sells tax.

- The end-user is supposed to claim a "use" tax, on their personal or business income tax, on items that were purchased out-of-state. However, 99% of the people do not claim a use tax... and the IRS does not want to spend the money to investigate the issue.

Do a search on entrepreneur.com - I saw an older article on this topic. Hope this helps.

[bhagood123]

Oh yeah, I forgot to mention... As far as an LLC is concerned, some states want sales tax filed quarterly or monthly. It depends on the state you live in. All income will be pasted through the LLC to its members. The members will report any loss or gain on his/her personal income tax... this is called a K-1 form or 1065.

But to answer the first question, YES - all businesses (ecommerce or not) and individuals are to report their income to the IRS... even people selling items on eBay, on the side. Some do, some don't.