How to report taxes on an internet Company?

Question

www.BuySmartShopping.Com Gifts Exchange has been making a bundle. I feel like though I don't have to report anything.

Answer 1

It does not matter how a business makes its money - it is going to have to consider tax provisions somewhere.

In addition to the Schedule C for sole proprietors and single member LLC's, you must consider corporations and partnerships. They have reporting requirements at those levels, and the individuals must then report any income received on their own returns.

Employment taxes must be considered as well. There will be federal, FICA, unemployment and state to think about. Usually, those returns are due quarterly. Sometimes the reporting must be done quarterly but payments are due more frequently, such as monthly, weekly, semi-weekly or by electronic deposit the day after the payroll date.

If you have been making "a bundle" I suggest spending some of that bundle on a competent CPA who will advise you on all the necessary reporting.

Do you think that you do not have to report anything because the server is located in a tax haven? If you live in the USA, you will be taxed on the basis of where the business is managed from. As you have posted this in the USA Taxes section, I assume you have some connection to the USA.

Answer 2

If you are the sole proprietor (sole owner) you will need to file Schedule C of Form 1040.

In order to do this you will need to keep an accurate record of your income and expenses. You might want to prepare for this by examining a Schedule C in order to familiarize yourself with the various categories of expense so you can summarize your expenses by categories on a daily, monthly, and annual basis. You should also read through the instructions for Schedule C and you will find that there are some advantages like having a separate office space in your home that is used only for your business. This will enable you to charge some everyday living expenses to your business on a prorated basis, such as rent (or mortgage interest), utilities, taxes, home owners (or renters) insurance, etc., based on the square feet of space you allocate to your home office.

Keeping track of income and expense on a running basis will enable you to know your profit or loss as you go along, rather than waiting until you prepare your annual tax return.

You should also register with your city and state tax departments. You will probably need to buy a business license and you will also need to file state sales and income tax returns. Your state Department of Taxation will be able to advise you on state taxes. Your state income tax form will probably tie into your federal tax return and not require a separate business income tax return.

Answer 3

Form 1040, Schedule C (business income)