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Do you want to know how customer returns are treated in a business? Or, how are business taxes affected if an online business operates overseas temporarily? Dealing with business taxes and its different nuances can be confusing and challenging. It is helpful to have a legal Expert’s input and insights to address any queries or doubts that may arise from time to time or when there is a change in the status, nature of business, entities, owners, provisions, tax rules and so on. Experts help avoid confusion and can provide the correct information at the right time.
Read below where they have answered a few questions about business taxes.
The different type of small businesses and the manner in which they are taxed are as follows:
Business taxes are based on a concept referred to as ‘gross receipts.’ These receipts are the total of the amounts received by the business from all sources during the annual accounting period, prior to any costs or expenses being deducted. If the business were to have customer returns and/or refunds, they are not considered as costs and expenses. To deal with the refunds or returns, the total revenue from all sales should be reduced by the amount or number of refunds issued in order to arrive at gross receipts.
There are a couple of tax scenarios based on the nature of business. If the business is completely online based and temporarily being operated overseas, there is no need to pay taxes of the visiting country. Additionally, when there is no fixed place that the business is being operated from, whether it is being run from the U.S. or elsewhere, the taxes that are payable will be from where the business is located and any personal income being claimed from the business would be payable at the place where these taxes are claimed. In this case for the online business, there would not be a need to pay taxes overseas as well as the U.S. If a sale is made overseas, the applicable sales tax would be payable on any product sold there. If it is a service, they too may be taxed and these taxes would be deducted from the U.S. liability as taxes paid in a foreign country.
It is possible that owners, shareholders or officers of the business or coirporation can be held personally responsible for the payment of the California franchise taxes. This is because usually the corporate veil of protection does not extend to these taxes. In the event of tax not being paid, the Franchise Tax Board (FTB) can place a levy or lien on the assets of these individuals. If you as an owner or member of the business do not have the money to pay taxes there may be a possibility to set up an installment payment plan with the Tax Board in order to satisfy the amount payable.
This is possible in the following ways.
In such a scenario, there is no requirement for one to register their company in New Jersey if the only presence in this state is to store goods in a warehouse. This is because, typically, warehousing goods through a third-party does not constitute as conducting a business in a state and as per the state requirements for registering a foreign corporation.
It is possible to run multiple businesses from a single corporation and many business owners elect to separate these into sub-corporations or sub-LLCsto reduce and separate risk. However, it is possible to use these separate DBAs for the businesses operated by the corporation. The corporation would be the owner/operator/taxpayer and will be taxed based on the profits or losses from all of its businesses as a corporation. There will be only one tax ID number. If several sub-corporations or LLCs are operated, each of these individual entities can have their own tax ID. It would be wise to use the coding from which the business makes the maximum proportion of its income.
If the business is incorporated, the owner would not be liable unless the tax authority can find a way to surpass the corporate shield against tax. However, this normally happens when/if the matter goes to court which may not happen all the time. If the business is not incorporated, the owner is personally liable for any debts, tax and other liabilities of the business.
Listed above are some of the questions people have raised regarding business taxes. However, the questions and doubts you may have regarding your business can be specific and customized, for which you require a similar type of answer. Therefore, to ask other business tax related questions and gain understanding and information, ask verified Experts online. They are readily available to help and assist in understanding the situation and providing available options, quickly and economically, from the comfort of your home.
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