Getting most answers by talking to Customer Service Representatives, progress is slow. I might have to attend a workshop. It is not clear though more clear than when starting this long, tedious journey. After learning about certain sections, it almost seems simple.
I do not like filing state taxes. It appears to be a scam to encourage people to hire Accountants during tax season. Even when filing a regular W-4 Form, state taxes is a confusing event.
Now filing 1040 Forms for federal taxes is easier. With a business, TC Forms are the new challenge. That is what they are called in Utah. I imagine each state has a unique name for business forms.
One gem is:
Sales and use taxes are transaction taxes. This means the transaction is taxed, not the actual goods or services. The buyer is the actual taxpayer.
Internet taxes are particularly confusing. Wanting to share some findings, internet businesses do not offer assistance for many taxes.
Several people believe internet sales are not taxable. This is false. Internet Service Providers (ISP) are not taxed. This means wireless, cellular, satellite and dial-up internet access is not taxable. Transactions on the internet are taxable. It is the Individuals responsibility to know how to file taxes.
Attempting to clarify this, the transaction to a buyer is taxable. When buying products for resale, buying something to sell to a Consumer (Consumer wants ownership), the transaction is taxable. When someone wants sells something to someone in the same state, it is taxable. When buying something out-of-state for resale it is not taxable. When buying personal purchases anywhere, it is taxable.
When selling something on the internet, tax is not included in the price. It is interstate commerce. The Buyer and Seller must notify people if it is a purchase or for resale. At that time, it is possible to declare taxes correctly.
Many internet companies do not include tax. I have a disclaimer for a couple sites, "Price includes tax." By adjusting the price for Consumers, they know the price includes tax; instead of, listing price and sales tax separately on an invoice.
On one site, it is always the same price whether it is resale or a personal purchases. The site still says, "Price includes tax." If buying for a business, I believe they are able to get a deduction if I declare taxes. If they say they are a Reseller then it is the same price. They collect taxes from Consumers.
It would be nice if sites include tax, yet laws vary. One site will send a MISC-1099 if collecting more than $6,000 in commissions during a year. An acknowledgment that it is a commission makes it appear as though it is employment. Several people decline reporting taxes.
There are many conflicts. A person has to apply for a Sole Proprietorship or Business License. Why would they have to do that if they are a Contractor, Publisher or Employee? Contractors are actually independent Business Owners who also file MISC-1099 when working regularly for the same individual or business.
Any sales or income for products or services are a sales and usage tax after generating income of $400 in 3.5 years. When they send a check without making deductions, it is a sale of products or services. If an Employer has an Employee sign government forms to declare taxes and make deductions from a paycheck, it is regular income to file on a 1040 Form by April 15.
When establishing a business, paying taxes makes it possible to gain recognition in politics. Some people believe taxes are unnecessary. Senators and Government Officials regulate commerce. To regulate commerce, there must be records of business transactions. When there are more business transactions, there is a higher importance in formalizing and respecting vocations.
An example of taxable income when running a Sole Proprietorship is: $100 for local gigs; 98.99 in sales of original artwork; $143.58 in income through vlogs, and $88.43 in online resale. This equals $431. Two years only $50 was filed as sale and usage tax. When the amount exceeds $400, it is income tax. Report income as federal income tax on 1040 Forms.
The price including tax is not all income. Only the price an item is sold for is income. The $88.43 might be $78.50 after fees to sell on a website. Delivery and other fees are separate. Sales of original artwork and online resale might be difficult find, because invoices do not remove tax. The price is what the item or service amount it cost when sold.
For example, an Accountant says they will file taxes for $25. Sales tax is $2. Income is $25. They amount payable as sales tax to the state before January 31 is $2. When selling original artwork it is possible to have the price and tax separately. Gigs, vloging and online sales are similar because it is payable as a fee. The local gigs and income through vlogging or blogging are the similar because it is paid in one sum. It would be sold as $27 when "Prince includes tax." Income is still $25 and sales tax is still $2.
If unsure about taxes, estimate taxes by adding sales together and then finding the amount in taxes. Gigs will usually pay an amount, such as: $100 or $300. Use online tax calculators to find what price plus tax equals $100 or $300.
Deliver fees are separate on invoices and also not part of the price. Other fees, business purchases and expenses are deductible on government income forms. Expenses should correlate to operating, promoting or improving a business. There are deductions for taxes on gasoline when using an automobile for business activities. Soap and deodorant are personal purchase even though appearance is important.
Business expenses are: packing supplies, inventory or travel. A vacation to Hawaii to tan is a personal vacation. A vacation to Hawaii to talk to Investors or attend a convention is a business vacations. The cost-of-doing-business has deductions.
Consult the state or federal tax offices through e-mail or by phone to clarify questions. I am happy someone wants to simplify tax codes. Most websites have a FAQ Page. FAQ an acronym for Frequently Asked Questions. Other people ask these questions.
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