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Do I have to file for taxes if I sell things online?

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Do I have to file for taxes if I sell things online?

Postby bºi » Thu Mar 21, 2013 6:52 pm

I plan on selling some old clothes and art prints on BigCartel and I have to have a Paypal to do so and I decided I'd start off with a personal account and then upgrade to business if I feel I'm selling enough. I'm not even sure how taxes and stuff work like that and I don't want to mess anything up or have the IRS after me. Can someone explain to me what I'd have to do in blatant terms? I'm new to all of this, thanks.
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Do I have to file for taxes if I sell things online?

Postby haldane » Thu Mar 21, 2013 6:54 pm

Get a book about small business accounting and read it. I'm not up on the latest books to know which one to recommend. There are two taxes that concern you: One is excise tax, or sales tax, which is the state you do business in. I'm a wholesale business and I'm not online so you need to find out if you have to collect tax on your sales in your state. I'm not really so familiar with the status of online sales, but many states are trying to get those taxes.

The other tax is income tax, both federal and state. You file those just like you would if you had a job, stating all of your income, and pay taxes on it. The thing about business (why you should read a book) is the deductions. All of your expenses are deductible, cost of inventory is deductible because you only pay taxes on profits. Advertising, telephone, shipping, pencils and paper clips. It's significant because your gross income may be $50K but after deducting your expenses it could be half that or less - that's what you will pay taxes on. Every business that's a real business should have an accountant, at least on call.......
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