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Online Tax Laws for Business

| Feb 8, 2013 | Business & Commercial Law |

Laws applicable to conducting business online are essentially tax-related.  If you want to save yourself from headaches and potential penalties down the road, understanding these online tax laws before doing business over the internet is crucial.  Our discussion will be split into domestic business within the United States and international business.

Domestic Online Business

First and foremost, you need to understand when to collect sales tax on business conducted over the internet.  Basically, whether or not your business has a brick-and-mortar location is the key to identifying whether or not you’re legally obligated to charge a sales tax.

If you own a store that also happens to sell items online, then you must charge sales tax.  If your business doesn’t have a physical location (an office or storefront, for example), you may not have to charge your customers sales tax.

If you do need to charge sales tax, you must pay attention to state-by-state requirements.  Some states do not charge sales tax.  Many merchant applications for websites will handle this for you, but in case yours doesn’t, or you want to double check, you can find a listing of state-by-state sales tax requirements here.

International Online Business

When it comes to selling overseas, the biggest concern is customs and duties.  You want to make sure that you’re shipping orders legally, and international requirements can seem confusing at first.  Fortunately, there are resources to help.

  1. Electronic Commerce: Selling Internationally is a guide published by the Federal Trade Commission, the Bureau of Consumer Protection and the Office of Consumer and Business Education.  This guide takes you through the qualities of a compliant business.  Best of all, the last page features a convenient checklist that allows you to ensure your business’ compliance.
  2. The E-Commerce Toolbox will help you understand the regulations and laws pertaining specifically to exporting goods from the United States to other countries.