Lets say your doing business with paypal and your monthly sales is about $10k. Your profit is about $2k. Are you paying your taxes ? I know some people don't and so far I just started recently I want to know more about 3rd party payment processing , direct merchant account.. and taxes.. you don't want to mess with uncle same they will come get you lol... thanks!

Um, yes. Not paying is a risk I'm not willing to take.

You should also be paying quarterly, probably.

NOTE: I am not a lawyer or accountant. Don't hold me responsible for bad things that may or may not happen by heeding my advice.

If your running a business you should most defintely be paying taxes. Even if your just doing internet "services", which some people think is un-taxable... i'd enter a tax mount and hold it back.

Paypal has recently started to release some information over to the IRS, and you really don't want to be caught with your pants down.

I'm not selling any product on the net right now. So i'm not paying any taxes. I use paypal currently using for my Online job. But most of my payment that i receive, paypal have deduct certain percent. That not a big deal for me. As long as i'm so satisfy using Paypal since a year ago. Good service for paypal. More secure than others.

If you are MAKING MONEY, you have to pay income taxes whether it is a product or a service and also whether you consider it a business or a hobby. I believe the amount that the IRS goes by is anything over $600/year has to be reported (check irs.gov to be sure).

If you are selling a product, sales taxes come into play, but that is at the state level.

I'm not selling any product on the net right now. So i'm not paying any taxes. I use paypal currently using for my Online job. But most of my payment that i receive, paypal have deduct certain percent. That not a big deal for me. As long as i'm so satisfy using Paypal since a year ago. Good service for paypal. More secure than others.

You still need to pay income tax if you're getting paid for a service. Just because you aren't paying sales tax doesn't mean you're immune.

The PayPal fee is the same as the fee charged by a credit card processing company - it's the cost of using it, and in no way covers your taxes. (If that was implied.)

@OP: You certainly need to pay taxes, and the PayPal fees may or may not be deductible. I'd talk with a CPA if you need a better explanation.

I believe the amount that the IRS goes by is anything over $600/year has to be reported (check irs.gov to be sure).

The threshold is $400/year of "net earnings". If it's less than that, you don't have to pay self-employment taxes in the U.S. See: http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

Lets say your doing business with paypal and your monthly sales is about $10k. Your profit is about $2k. Are you paying your taxes ?

Absolutely, we pay our taxes. I have little doubt that if we don't pay our business taxes, eventually we will be caught.

Paying taxes is a cost of doing business. Simple as that. If you are making money, then you need to pay your taxes as determined by the laws of whatever country your business is registered in.

If you don't want to pay taxes, this is easily possible. Just move to Panama and do your business from there. :)

I had the same question years ago and now I have an accountant so yes you have to file taxes for every penny. Just find a local accountant, provide him or her with your paypal CSV transaction history files, and they will add up your expenses. It is good to file taxes in a way since you get back credits for any fees that you pay for your business.

I would be very careful about answering that questions with a "No" regardless of what you do or do not do..... US Govt agents have been know to watch the larger forums and have alerts setup to notify them of such discussions so they can track done the offender in the digital age.

sinc888, even if you don't have any sales tax that must be paid for your online orders - you will still be generating revenue/profits for your business and incurring a tax liability there.

As mentioned earlier in the thread, the best course of action is to get a local accountant and make sure that you are taking care of your tax obligations on the city, state and federal levels.

And look at it like this - you WANT to be incurring tax liability... because that means you're making money! :)

In addition, a prudent step might be to set aside the money that you will have to pay for taxes on a monthly basis and put it in a bank account and earn some interest on it. Not only does this let you generate a little extra money on Uncle Sam's money (so to speak) but it ensures that the money will be there when it is time to pay your taxes.

Example: say that your account says that out of the $2K net profit you are making per month, 30% will be going to Uncle Sam. You might then opt to set aside $2K x 30% = $600 per month into a a bank account.

Otherwise, if you were to spend that money then a year later when it is time to write your check to Uncle Sam, you might find yourself short the money and that could be quite stressful not to mention financially painful if you start incurring penalties from the IRS.

it solely depends on the country you live and its tax rules :)

If you're generating income, on or off-line, you're required to pay taxes on your earnings, regardless of whether you're operating in the positive or negative.

If you're looking for tax breaks, I'd suggest filing as an LLC or Corp. Self-Employment taxes are quite high. With an LLC or Corp you're able to write off business expenses so long as you keep proof of purchase (i.e. receipts).

Of course, I'd consult with a tax professional and a lawyer and not take the advice provided here on WHT to heart as most of us are not lawyers, however, you'll be able to write off items such as home office, car expenses, gas mileage, business meals and so forth.

Irregardless, taxes still have to be paid at the end of the quarter/year.

Ofcourse yes, Paying taxes can increase your assets and Balance. Not paying taxes may result in income tax raid

I'm not selling any product on the net right now. So i'm not paying any taxes. I use paypal currently using for my Online job. But most of my payment that i receive, paypal have deduct certain percent. That not a big deal for me. As long as i'm so satisfy using Paypal since a year ago. Good service for paypal. More secure than others.

Any funds/income that you receive is taxable. Also be aware that Paypal does report information to IRS.

The fees paypal charges have nothing to do with income tax you are required to pay

if you don't make more than 100,000 USD yearly by paypal you should not pay TAX'es anyway paypal fee's is counted as a tax for you

if you don't make more than 100,000 USD yearly by paypal you should not pay TAX'es anyway paypal fee's is counted as a tax for you

And where did you get that information from? :eek:

if you don't make more than 100,000 USD yearly by paypal you should not pay TAX'es anyway paypal fee's is counted as a tax for you

What are you talking about? I'd be very worried if your making anywheres near $100,000 in paypal and not paying taxes. You will be caught.

all these payment and online stuff make taxes a little difficult but hey the IRS got new forms for all your misc. income