Legal structuring


OK, so maybe I’m just naïve, but I had no idea online businesses had to be registered with the state and city in which they reside.  I thought it was just registering a domain name and going from there.  In working through my coursework this week, I found that I was grossly misinformed.
It looks as though recently guidelines have gone through for online businesses collecting and paying sales tax.  Apparently states have lost a lot of sales tax due to internet sales.  If they don’t collect these taxes on items purchased, they are going to have to find a different way to collect that money.  It has been the responsibility of the customer to pay use tax if their online purchases don’t have tax collected.  Apparently this has been overlooked and most people don’t pay this.
The good news is that not all online businesses have to collect and pay this.  In fact, in many states, the threshold for sales tax is $100,000 or 200 transactions.  I was thinking if I sold that much within my state, that I would be responsible to pay for this.  However, it is only the state it is delivered to that counts.  So even if I went viral, I would only have to pay the taxes to each state that I went over this threshold for.  There are a few states that are a little different, but the majority of them it is ok for.  Knowing this information, I think I am going to have to keep a close eye on the rules, but for now, I’m going to chance not collecting this.  The worst case scenario is that I would be required to figure out and pay the sales tax from my earnings. 

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