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WebTaxMan
WebTaxMan, Tax Accountant
Category: Tax
Satisfied Customers: 922
Experience:  20+ Years experience-CPAs & My Own Business/IRS Authorized e-file Provider/CA Tax Education Council
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I recently started a small internet business in Nevada.

Resolved Question:

I recently started a small internet business in Nevada. I''m selling 7-day subscriptions to online learning modules. Once a customer purchases a module they have a week in which to pass the quiz in the module. Once a module quiz is passed then the customer will receive a certificate via email for stating they''ve earned XX number of continuing education units. I was wondering if anyone could tell me what taxes this type of business is subject to?
Submitted: 6 years ago.
Category: Tax
Expert:  WebTaxMan replied 6 years ago.
HiCustomer Thank you for asking your question on Just Answer. The other Experts and I are working on your answer. By the way, it would help us to know:

-Are you a sole proprietor?
-Will these modules you sell actually fulfill an industries continuing education requirements?
-Do you know if sales tax is an issue or not?
-Are these modules only going to be sold in the USA?

Thank you again for trusting us with your problem. Please reply as soon as possible so that we can finish answering your question.
Customer: replied 6 years ago.
Reply to WebTaxMan's Post: Thanks for the quick response.

-My business is an LLC.
-The modules will fulfill an industry's continuing education requirements.
-I don't know if sales tax is an issue, which is something I was hoping you could tell me (along with any other applicable tax).
-The vast majority of the modules will be sold in the USA but I imagine that foreign sales will account for a small percentage of my sales.
Expert:  WebTaxMan replied 6 years ago.
HiCustomer

Since you mentioned you are set up as an LLC, that requires further clarification, so we can get you a much more precise answer.

Did you file for the LLC in Nevada, or another State?

Are you a single member LLC?

If not a single member LLC, have you elected to be taxed as C-Corp?

As you can see, there is a lot going on with what you hoped was going to be easy question :-)

We just need these details, again, to make sure you get the correct information.

As far as the sales tax goes, can you tell us what industry will use you modules?

Thanks,

Mike
Customer: replied 6 years ago.
Reply to WebTaxMan's Post: Thanks for the continued support.

I filed for the LLC in Nevada.

It is a single member LLC.

The industry that will use the modules is psychology, specifically behavior analysis, in the human service industry (e.g. providing services to children with autism). The certification is from the Behavior Analyst Certification Board (BACB.com) and the certification categories include: Board Certified Behavior Analysts and Board Certified Associate Behavior Analysts
Expert:  WebTaxMan replied 6 years ago.
Hi againCustomer

Thanks for providing that extra information.

Since you are just starting out, I want to give you some excellent resources that available to you for free. Click here for Nevada’s Small Business Association. There is really great information on that site.

Another excellent source is Nevada’s S.C.O.R.E. Click here and you will see that many successful returned businessman and woman offer new start-ups counseling for free.

Your single member LLC is taxed like a sole-proprietorship, but has the legal advantages you know about when you formed the LLC.

You will file your Federal taxes using Schedule C.

Using Schedule C, you see what types of expenses are available to you.

The taxes you are responsible for consist of the ordinary income tax rates, but in addition, you will be required to pay self employment taxes that are roughly 15% per year on top of your ordinary income tax. Schedule SE explains the self employment tax.

It gets complicated on the State level. But generally speaking, if you plan to keep only one office in NV, and since Nevada does not have a personal income tax, you will not owe income tax to the State of NV. That can change though, and if you'd like to read through what does change the tax issue click here for an excellent explanation.

The self employment tax is the tax that will concern you the most. Trust me, I have to pay it, nobody wants to, but the IRS is really cracking down on small businesses right now, and it's best to be in compliance from the get go.

Along with answering your question, I gave you quite a large amount of information to read through, but it is very good information, and can really make or break your new venture. Keep very good records too, that is very important as well.

I looked up Nevada sales tax laws, and from what I found, since you are selling subscriptions, those subscriptions should not be subject to sales tax, nor you collecting sales tax.


__________________

Should you require further clarification, please never hesitate to ask. It would be my pleasure to clarify issues related to your question.

If you feel I have given a complete answer, and you are satisfied with my answer, please press the GREEN ACCEPT button. Feedback and bonuses are always greatly appreciated!

Regards,

Mike

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WebTaxMan, Tax Accountant
Category: Tax
Satisfied Customers: 922
Experience: 20+ Years experience-CPAs & My Own Business/IRS Authorized e-file Provider/CA Tax Education Council
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