How Home Business Avoids IRS Crocodile
By Anonymous
It's a jungle for home businesses. Wouldn't it be grand if the crocodiles gave full instructions about how to avoid their jaws? Well, the IRS has done just that. You can find all sorts of interesting details at www.irs.gov/businesses.
Most baby boomers realize that their pension won't allow them to live in the style to which they are accustomed. Making money from home is an obvious solution. You can use the experience of a lifetime to offer all sorts of services. However the IRS crocodile isn't the only danger. Before you start up a service business, find out how much insurance will cost you. I offered a translation service for a couple of years, and insurance cost me more than I earned.
An internet business helps you to avoid the tax man to some extent, if you are careful to avoid the crocodile. If you have a business in Oregon, New Hampshire, Delaware, Montana or Alaska you don't usually have to pay sales tax, though some towns may have their own sales tax. If you sell clothing in New Jersey, you won't have to pay tax on it.
In general your business can't be expected to collect sales tax in a location where it has no physical presence, but physical presence can be very slight indeed. For instance, if your web host is in a state, you are required to collect sales tax for all sales made to that state. Also if you have a salesman residing in a state, you may have to pay sales tax there.
There is no statute of limitation release from sales tax obligations. You can't even hide behind a corporation that shields you from personal liability for everything else.
If you live in California, you might like to move to Nevada, which has no income tax. You may think that the IRS can't touch you for your business purchases, but if you live in a state with sales tax, and you make a purchase from somewhere without sales tax, you are liable to pay tax to your home state.
Does this sound too complicated? Then don't sell anything! You can make nearly as much income from affiliate sales as you can from selling your own stuff, and that is a commission, not a sale, from the point of view of your Internet business.
Please leave a comment to share your ingenious ideas for how baby boomers can avoid traps when setting up a home business.
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