| Starting an online business can seem overwhelming at | | | | county. |
| first. Finding the right domain name, getting reliable | | | | Fictitious Business Name |
| hosting, web design, and figuring out credit card | | | | If your business uses a name other than your own, |
| transactions are full-time concerns. One | | | | then it is required by the Trade Name Registration Act |
| often-overlooked component is taxes. If your website | | | | for you to register the fictitious name (which is also |
| is selling something tangible, you are required by law to | | | | known as D/B/A, doing business as). It verifies that you |
| report it. Leafing through the myriad of tax rules and | | | | and your business are one and the same. Depending |
| regulations is frightening, and some just ignore it | | | | on where you live, the form is usually filed at the |
| altogether (at the risk of being audited). However, if | | | | county clerk's office. |
| you want to save yourself from future headaches and | | | | Trademarks |
| lawsuits, it's best to get everything straightened out as | | | | Domain names are a large part of your internet |
| soon as possible. | | | | business, and protecting it is essential. A trademark |
| Do I need a tax ID number? | | | | identifies the source of goods or services to the |
| An Employee Identification Number (sometimes called | | | | consumers. You cannot register a domain name by |
| Federal Tax ID number) is a nine-digit number assigned | | | | itself, because just the name is merely an address. |
| by the IRS that identifies your business to the | | | | However, your online business name can be |
| government. You will need to get one if one or more | | | | trademarked if it provides a service to consumers, |
| of these apply: | | | | such as booking flights, research on parenting, |
| 1.You pay wages to any employees. | | | | comparing insurance companies, etc. If you create |
| 2.Your business is a corporation or partnership. | | | | items that you sell on your website, those product |
| 3.You file pension or excise tax returns. | | | | names can be trademarked. |
| If you are the only employee for your business, then | | | | To learn more about trademark rules, go to |
| you can run your business as a Sole Proprietorship | | | | Sales Tax |
| entity, and use your Social Security Number as your | | | | Each state issues a sales and use tax which applies |
| EIN. However, you should look at all of the business | | | | to the use or consumption of tangible personal |
| structures before you decide which one is right for | | | | property and certain services. If you sell something |
| your business. | | | | tangible, tax must be collected. However, if you sell an |
| What are my business entity options? | | | | e-book, it might not have to be. A sales tax number is |
| A Sole Proprietorship is the most common for an | | | | required for each business before opening, and the |
| upstart online business. It is owned and maintained by | | | | rules are different in every state, so this is something |
| one individual, and has no existence apart from that | | | | you need to look into. I live in Missouri, and according to |
| individual. All the income and expenses are on your | | | | Missouri state law, I am subject to sales tax if the |
| personal tax return (form 1040). It is the simplest form | | | | product's shipping and delivery points are both in |
| of business. However, you are personally liable for | | | | Missouri. However, your state might be different. |
| your company's liabilities. If someone sues your | | | | Self-Employment Tax |
| business or your business gets too far into debt, your | | | | Self-employment tax (SE tax) is for individuals who |
| personal assets can be seized. | | | | work for themselves, and is a social security and |
| A Partnership involves two or more people who share | | | | Medicare tax. You must pay the SE tax and file |
| the profits, or losses, of the business. It's just like a Sole | | | | Schedule SE on Form 1040 if your net earnings from |
| Proprietorship, except you need an EIN. Also, profits, | | | | self-employment equaled or exceeded $400. To figure |
| losses, and liabilities are split between the partners. | | | | your net earnings, multiply your total earnings subject to |
| A Corporation is a separate legal entity from the | | | | the SE tax by 92.35%. You will be taxed 15.3% on the |
| individuals who started it. It can be taxed and is legally | | | | net earnings. |
| liable for what it does. The benefit of a corporation is | | | | What can I deduct? |
| that its corporate status does not hold the employees | | | | As far as deducting part of your home as a business |
| liable. The downside is that it is expensive to start, and | | | | expense, that only works if that part of your home is |
| requires a lot of bookkeeping. | | | | exclusively for business. If your computer and desk |
| A combination of a Corporation and a Partnership is | | | | are in the living room, that square footage cannot be |
| the Limited Liability Company (LLC). The advantage is | | | | deducted. To deduct a part of your home, it mustmeet |
| that the profits and losses are passed to the owners | | | | one of the following criteria: |
| without taxing the business itself, and the owners are | | | | 1.Your principal place of business |
| not personally liable. However, there is no stock, fewer | | | | 2.You meet or deal with customers or clients in this |
| incentives, and loads of paperwork. | | | | area as a normal part of your business. |
| As you can see, there are pros and cons to each | | | | 3.An unattached, separate structure used in connection |
| business structure. It is highly recommended that you | | | | with your business. |
| talk to a local accountant or lawyer as to which | | | | There are also a few other small requirements. The |
| structure best fits your needs. | | | | only exceptions are for day-care providers and the |
| What other forms and taxes do I need to worry | | | | storage of inventory or product samples used in your |
| about? | | | | business. If you buy a computer and over 50% of its |
| Business License | | | | use is for the business, you can deduct the |
| There are many types of licenses, and even for an | | | | depreciation on the portion of your computer used for |
| online business you will probably need one to operate | | | | business as a miscellaneous itemized deduction. |
| legally. If the business is located within the city limits, | | | | Expenses such as web hosting, domain registration, |
| then your license comes from the city. If you are | | | | etc, can all be deducted as business expenses. |
| outside the city limits, the license comes from the | | | | |