Are online businesses taxable?

The question we all ask ourselves when we start an online digital business is whether we should pay taxes on our income and revenues.

For a long time online businesses have been exempt from paying taxes unless they have a physical space or some kind of commercial nexus that complements or supports this concept. Currently there are already tax rules for digital businesses that are developed via the Internet and have specific characteristics. Knowing them will broaden our sense of information and will help us to keep our company within the legal frameworks.

Payment cases.

Our online business is entitled and obliged to pay taxes as long as it has a physical presence. If we have an office or headquarters, some kind of warehouse where we keep our marketable products or a sales point with physical interaction of customers. In case our company does not have a physical presence but it is related to another state or foreign country, it is also subject to taxes. Another case that counts to include in the tax collection is if our business exceeds a certain amount of transactions or demonstrable income.

Sales tax.

The sales tax records the transactions of services or products purchased by customers, being a legal record of the profits of our company. There are countries or states where tax returns are not required for digital businesses; it is always of utmost importance to be informed about the legal effects on sales tax in the region where you are located even if your business is digital. The location aspect may influence the sales tax; because in case of establishing business nexus in different states, discrepancies in the sales tax payment laws may require you to be taxed while it does not happen in other states.

Income tax.

Normally all the companies are in the obligation to pay taxes on the income as tax return annually. If we have in our type of business a payroll of personnel that works for us, the payment of taxes on the income is regulatory. This example is also valid when having a type of logistics and a physical facility where it is commercialized. For all the cases once we obtain notable and justified income our business is in the obligation to pay income taxes.

Use and consumption tax.

The goods and services we offer to customers are also subject to taxes even when they have been acquired outside the state where they are marketed. In case of a proven acquisition of goods for its commercialization even in digital spaces the legality of taxes is fulfilled in the same way. According to the legislations of most of the states or countries all the remote sellers have the obligation with their business to collect taxes on use and consumption of goods and services. Sometimes we may think that if our business is digital or remote, whether it is a product, goods or services business, we will be exempt from taxes. Once our type of business is legalized, it is to be assumed that the commercialization will bring remarkable incomes.

Employment situation.

It is good to be clear that our business model influences the type of tax to be paid. The tax law does not apply the same for an online store as it does for an Internet consulting business. In an online consulting business the tax is considered accor