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Are Online Businesses Subject to Income Tax, Employment Tax & Sales Tax?

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    Are Online Businesses Subject to Income Tax, Employment Tax, and Sales Tax Obligations?

    Yes,  your business may be subject to all three of these obligations. That is,  simply because your business is conducted on the Internet does not mean that your company is exempt from paying taxes on income and business activities. The extent of the obligation your company must satisfy is determined by the type and scope of your business activities.

    Employment and Self-Employment Taxes for Online Businesses

    If your business has employees who help with customer support, packing and shipping orders, running your website, or other business activities it is highly likely that your company has an employment tax obligation. Employment tax obligations must be satisfied at the state and federal levels.

    Even if your company in a solo operation or employs independent contractors you are likely to have some employment tax related obligations. In the case that you are your company’s sole worker, it is likely that you will need to account for self-employment taxes. If you employ independent contractors, you will need to report their wages and compensation on a 1099.

    Income Tax Payment Obligations for Online Businesses

    Your online business income is subject to tax. However, the exact method of taxation your business will face is based on its form of organization. That is, certain forms of organization will pass-through the tax to the individual owner or owners. By contrast, corporate forms allow for direct taxation of the online business. Assessing the type of income tax your company is subject to and ensuring that your company is not paying more income tax than required is a necessary inquiry for all internet business owners.

    Online Sales and Use Tax Obligations

    Online businesses may be obligated to collect and turn over sales and use tax. In California and many states, this often turns on whether you have facilities and operations in the state. However, the California Board of Equalization has stated that even out of state companies are required to register for use tax administration.

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    Our headquarters is located in Irvine, CA. Our beautiful 19,700 office space is staffed full-time and always available for our clients to meet with our highly qualified and experienced staff of Attorneys, Certified Public Accountants and Enrolled Agents. We also offer virtual consultations and can travel to meet with clients in one of our satellite offices.

    Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective representation of a client. To make this as flexible, efficient, and convenient as possible, David W. Klasing is an Instrument Rated Private Pilot and Utilizes the Firms Cirrus SR22 to service client’s in California and in the Southwest by air. Offices outside these areas are serviced via commercial jet airlines. None of these costs are charged to our clients.

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