Selling online

[Carole]

Do you really need a business licence to sell goods or services online? Like doing website services (banner creation, logo creation, graphic designs, website design)... would you be required to register as a business (because of the tax issue) or could you claim that income as a hobby?
Another example... classified ads websites. If you provided free text ads, and charged $10 to place a photo ad, would you have to have a business licence?

I'm afraid I don't know a lot about internet laws, and it is so hard to find websites about starting up an online business site that isn't already a business 'in the real world'. Any other websites/email lists/forums on this topic would be appreciated as well! :)
Thanks,
- Carole

[Nephthys]

I would love to know the answer to this too.

I am setting up a web design site where I get paid to my name via check but don't know if I have to get those occupational licenses, etc etc.

[pixelmonkey]

i had this same question when i started out about 4 years ago. the answer is yes! this buisness licenses (not a standard one) will enable you to make sales "nationally" and if you do your web development without the customer reciving a material object that can be accounted for there is no need for a standard buisness licenses (so if you burn them a backup copy of their entire web, give it to them free and dont list it on the ticket!). The transactions do not require taxing the customer, but do require the same as income tax when it comes to paying uncle sam. if you would like i can post some more detailed documents relating to this. just ask...


i have worked for this weekend! server crash and only 1/2 hour down time!
chris<pixelmonkey>:D

[Carole]

Yes, I'd really appreciate the detailed documents when you have some time to do so! :)
Thanks a lot

- Carole
webmaster@equusconnect.com

[Nephthys]

I would too..

I also was told I needed to have someone come to my 'home office' and do an inspection to receive some zoning or occupancy license? Is that necessary?

I am going to be doing web design from different locations.. (ie. laptop or pc at my boyfriend's house)

Can I just have a license and that's it?

Thanks a bunch..

[Jason]

is that each state has it's own governing laws. Pennsylvania for instance has an occupational privilege tax, where you must pay the city that you operate in for the privilege of operating there.

It also depends on whether or not you have incorporated (which isn't a bad idea, because when you are operating a business that is not a corporation, you are personally liable for everything that happens in the business.)

Chris, if you have some relevant national information, feel free to post here. But don't forget that many customers may be international as well.

[Nephthys]

I will not be incorporating as it takes a lot of time and money that I don't have at the moment. :) I at the moment, don't feel that I will be liable for much as I am not going full force at the web design thinger.. I am thinking about incorporating within a year or two though once I save up money and have some issues settled.

I was hoping, that I can just do these web design projects and have them pay me via check, I can include it in my taxes as extra income, etc.. I thought that's all it would take but now I'm confused. :( Is this not the case? Or is it illegal to work like that?

Confused in South Florida -
Jessica

[TheKman]

Visit with an Accountant, a local accountant will probably know a lot more about the local situation. It will be different in every state. Generally speaking you can have a sole proprietorship. As to a business liscense most states want you to get one so they can collect their hidden tax aka liscense fee. Ask around and find an accountant that handles mostly small business. They will have a good handle on local issues, cost less, and spend more time with you and your needs. Many of these accountants will also help you incorporate. You often don't need a lot of money to do this if their are no partners or complicated issues. Often people will get a Limited Liability Corporation (LLC) for $300-700 depending on local cost issues. These LLC's can be very beneficial as you can really get slammed on taxes as a sole proprietor, especially at the federal level. The DREADED self-employment tax, about 15%. One plus to having everything legit, you can tracj=k and deduct any expenses related to your business. Ie. Internet Access, phone bill and charges, mileage, home office expenses, computer maintenance and upgrades, etc. Good Luck!

[pixelmonkey]

for missouri all i needed to have is a merchants licenses, which enabled me to sell completed sites to buisnesses in other states without having to hassle with sales tax. the annual tax for the licenses is quite heavy and expect to pay in about 33% of your net sales. this also offered me a greak kickback durring college (which is "legal" or atleast my tax filer says it is) anyhow it kept me from paying in anything for what was made... but i'm still waiting for my return for the regular income tax.

mentally insane, cronoically ill
chris<pixelmonkey>:D

[Nephthys]

Thanks for all ya'll's input on this matter. I'm going to see an accountant whenever I'm settled to really go full force with the web design. All of your comments helped and are very much appreciated.

Thanks again!