- Overview
One of the main drawbacks and complications of e-commerce businesses is taxation.
We all know that every country imposes particular rules and regulations related to tax.
Conventional business owners don’t face the same tax implications as e-commerce business owners. In case number 2, the business’s potential customers could be across the whole world and not situated in one area or country like case number 1.
- Explanation
With the globalization of the e-commerce markets, owners are now accountable. They must know the regulations and rules applied in taxation in their countries, noting that such a task is challenging and complicated.
The owner should know where is the place of payment of the income tax, also known as a direct tax, is the place of supply? Or the place of consumption?
Is the buyer accountable to pay indirect tax or VAT or not?
These are all complications that conventional businesses don’t have to deal with since they are often dealing and operating with minimal markets.
- Example of when it is faced
To treat the matter from a practical perspective, let’s dig in in this particular scenario:
We all know that the United States imposes a sales tax, which is payable by sellers who have a physical presence in the state they are selling in. This could be an office or inventory, warehouse, etc. or have nexus in this state. This means that they have achieved several sales or customers that somehow connect to the state and therefore liable for sales tax.
In the scenario where a business sells goods in Washington D.C., in California and Pennsylvania, it is essential to highlight that the regulations applicable in Pennsylvania differ from those imposed in Washington D.C. and so on.
The business owner may not be liable for sales tax in Pennsylvania since the sales tax application rules are not satisfied but liable for the sales tax in Washington D.C.
Here, the business owner will have to make sure that he is compliant with all the rules and regulations and invoice the customer an extra fee for sales tax whenever the business should pay such tax to the state.
It is essential to mention that sales tax is applied on the state level and not nationally.
- Why is it important?
You might ask yourself, why is complying with tax rules so important?
Well, paying taxes is a duty imposed on all persons and registering with the proper authorities.
The person who does not pay the taxes that he is liable for can get severe penalties that can affect his business’s existence.
- How can a lawyer help?
A lawyers’ assistance is of significant effect since he can be the perfect guide for the rules that could be best suitable for each case, which is connected highly to taxes and their implications.
Besides, a lawyer has often connections with auditors that can help you further and handle your taxation matters to focus on your business.
If you feel like you need more assistance and further clarification, do not hesitate to visit lexyom.com and book an online consultation with a lawyer.
