e-commerce question

  • wmthomas1
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  • wmthomas1
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Post 3+ Months Ago

When opening and building an e-commerce site including accepting credit card transactions, will I need the typical business license and the "State Board of Equalization" permit (state tax) as one would need to open a traditional business. I'm sure the answer is yes but I thought I'd ask anyway as this will use up about 25% of my budget. Thanks, Bill
  • harryhood
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  • harryhood
  • Posts: 141

Post 3+ Months Ago

Since the laws that govern taxation and business licenses vary so much from state to stat I think you would be best served to get advice from a tax professional from your area.
  • UNFLUX
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Post 3+ Months Ago

great advice harryhood. And it really doesn't matter anyway, whether you pay the tax on transaction, or quarterly, or at the end of the year when you file -- you're going to have to pay taxes no matter what.
  • C_M_Livingston
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  • C_M_Livingston
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Post 3+ Months Ago

In most states you would need to open a business. Check with a professional if you want to see if there is a way to avoid opening a business.

The simplest type of business is Sole Proprietor, which is very easy and cheap to establish. You can even file your business and personal taxes as a single tax return in some states.

A corporation or LLC (limitied liability corporation) or s-corporation are more expensive options. Also these are MUCH heavier on paperwork and more difficult to manage.

The good thing about corporations is that there is a separation between yourself and the business. If your business gets sued or is unable to pay debts and you are a Sole Proprietor they can go after your personal assets (House, Car, etc.) If it is a corporation you are protected from personal liability (again, check applicable laws).

However, with a new business you will often find yourself signing a "personal guarantee" in order to get funding or to open a merchant acccount for credit card processing. This uses your personal credit rating to obtain the loan/account but it also makes you personally liable for any bad debts owed by your company.

My advice is to open a business of some sort. Once you establish a successful business, many doors of opportunity will open. Funding for new ventures comes easier, and you will get better terms on all your agreements.

I hope this helps. I am speaking only from experience and I am not an expert of any kind.

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