15 {{ upvoteCount | shortNum }}
15 {{ upvoteCount | shortNum }}

IM Profits Taxation

by Lokki08
13 replies
Hi Warriors,

I wanted to hear from different warriors that how do you usually take care of taxation when it comes on earning online. Obviously different countries have different taxation, but how it is in your country? How much tax you have to pay for your income? Do you have to establish a company in order to get six figures income?

From my side I could tell that here in Finland when you have paid taxes at least 8500€/year you have actually to establish a company and pay taxes according to companies which is much higher than our 20% average rate.
#profits #taxation
  • Profile picture of the author ChrisBa
    I just recommend taking it all to an accountant and letting them handle it all

    From Canada - you are put in different tax brackets depending on how much you make (for personal at least). Things are different if you incorporate.
    Signature
    {{ DiscussionBoard.errors[10040620].message }}
    • Profile picture of the author Lokki08
      Originally Posted by ChrisBa View Post

      I just recommend taking it all to an accountant and letting them handle it all

      From Canada - you are put in different tax brackets depending on how much you make (for personal at least). Things are different if you incorporate.
      Thanks Chris for the advice . But let say if you make a million dollar a year do you still have to establish a incorporate in Canada? I mean like do they force you for such if you want to withdraw them to your account? Sorry for funny question
      Signature
      Discover How CPA Newbie Made First $400 In Just Few Days On Autopilot! - Get Your FREE Copy Now For Exclusive Time Only
      {{ DiscussionBoard.errors[10040634].message }}
      • Profile picture of the author ChrisBa
        Originally Posted by Lokki08 View Post

        Thanks Chris for the advice . But let say if you make a million dollar a year do you still have to establish a incorporate in Canada? I mean like do they force you for such if you want to withdraw them to your account? Sorry for funny question
        An accountant can probably answer better than any of us, I don't know if there is a min or max to become inc, but it normally helps with taxes. Corporations are taxed differently than individuals and there are different tax write offs. Keep in mind that depending on what you Do, often you will legally need an accountant to sign off on the books.

        Also just a heads up, I'm willing to bet each country has different laws, rules and regulations.
        Signature
        {{ DiscussionBoard.errors[10041140].message }}
  • Profile picture of the author HelpingYouBeAnExpert
    I believe in freedom and the power to tax is the power to destroy so I'm against it. That being said I'm forced to pay them since they have the force, so against my fill I comply (by using an accountant).
    Signature

    Join Next Live Mastermind Zoominar 100% Real World Secrets to Get Up And Running. Are you Stuck? Don’t miss it www.MonthlyMastermind.org
    {{ DiscussionBoard.errors[10040663].message }}
  • Profile picture of the author Mehhthew
    Hey Lokki,

    Search for taxation laws in your country, I'm sure they've a webpage just for it. And yes, chances are if you're making quite a bit for yourself, you've to pay tax. Best to bring it to an accountant like what the seniors above me said. Better to pay a bit of tax than to risk losing all of it suddenly, keep grinding sir!
    {{ DiscussionBoard.errors[10041072].message }}
  • Profile picture of the author Lokki08
    This is definitely very important part of IM business. I need to find more about accountant or hire one or maybe I will study accounting and do all required stuff.

    Have you guys hired accountant for yourselves or you simply pay taxes normally like a normal person who's doing a job? I have always been paying taxes and will be in future as well. I don't want to do anything illegal so I would rather keep clean and pay taxes, .
    Signature
    Discover How CPA Newbie Made First $400 In Just Few Days On Autopilot! - Get Your FREE Copy Now For Exclusive Time Only
    {{ DiscussionBoard.errors[10041723].message }}
  • Profile picture of the author Write Now
    I would suggest taking your questions to a professional. Any advice you'd receive here would be anecdotal at best and you certainly don't want to risk getting on the wrong side of the government.
    {{ DiscussionBoard.errors[10041823].message }}
  • Profile picture of the author Med Man
    EU just recently introduced VAT on electronically sold goods and services so better check with an accountant if and how this affects you..

    Tax and legal questions are really always something you want to ask professionals. It's all further complicated by the fact that each and every country has its own tax rates and rules, thus nobody can really help you except the tax expert or accountant who knows the specifics of your actual country. You are just risking too much by trying to apply the rules from any other country to your own situation.

    I'm sure everybody in WF would love to help, but you'll be best advised to seek local professional's advice.

    Hope this helps.
    {{ DiscussionBoard.errors[10041905].message }}
  • Profile picture of the author Michael J Anthony
    In the US, it depends on how you decide to file your taxes. There is always tax due on unreported income here. Or, you should assume that a tax is due unless you can prove otherwise. Therefore; In the US, one should establish a business if you're making any significant kind of income online, or are claiming business expenses, but you don't have to. You still have to claim the income somewhere though. I established whats called a DBA (Doing Business As), which is a simple, single form that is filed with my county, and then file an individual tax return as a Sole Proprietor - which is what I been doing so far. Its just a good thing to do in case the IRS has any questions about where the extra income, or expenses, are coming from (and this has actually happened to me). You can show that you've established some kind of business and are "doing business as...such and such (your registered business name)" in a certain industry. But soon, I will form an LLC (Limited Liability Company), which should avoid any questions in the first place. Its just a matter of risk at this point. As a Sole Proprietor, I bear all the risk as an individual but as an LLC, or an S or C-Corporation, the business bears most or all of the responsibility and not the individual. Also, business owners typically pay less tax than wage earners in the US. So its a good idea to start some kind of business here. Of course, whether it is profitable or not is a different story.
    Signature
    {{ DiscussionBoard.errors[10041924].message }}
    • Profile picture of the author danbrey2010
      Originally Posted by Michael J Anthony View Post

      Its just a matter of risk at this point. As a Sole Proprietor, I bear all the risk as an individual but as an LLC, or an S or C-Corporation, the business bears most or all of the responsibility and not the individual.
      Please don't form a business entity simply to reduce or eliminate personal responsibility and liability. You'll be sorely disappointed.

      Although you are technically correct, the majority of small business owners don't operate their business as a...well...a business.

      The law requires (varies by State) each business entity (LLC, LP, C-CORP, S-CORP, etc.) to conform to specific business standards. Examples are holding annual meetings, keeping minutes of the meetings, establish and conform to written company agreements, etc. And this is where people find themselves in trouble when they are served with civil or criminal court papers.

      And even if you own a properly run business entity, you and the business can be held liable for damages and debts.

      If an owner is negligent and/or causes harm or damages to an individual, his company and his personal assets can be subject to a judgement settlement. If an owner personally secures debt for the business, then his personal assets can be used to settle the debt with the creditors. In short, somebody is going to pay. And if you're not running your business according the the business standards of your state, then you have just made it a lot easier for a plaintiff's attorney.

      If you are really concerned about protecting your business assets and your personal assets then you'll need to be more creative in structuring your business entities. Every business is unique so my best advice is to contact a business formation professional or business attorney (yeah, I just made a shameless plug!). They can help steer you in the right direction. HINT: Hopefully you have more than one business entity.
      {{ DiscussionBoard.errors[10125650].message }}
  • Profile picture of the author Lokki08
    I contacted my tax office and made few questions regarding this matter. So it seems here in Finland we have following rules:

    1. You must inform all income you get from online to your tax office (obvious and normal)
    2. You must establish a business if you sell a product.
    3. You must pay VAT if your online business income in one year will be at least 8500 euros per year.
    4. You must pay income tax and corporate tax (not together at the same time, specific rules)
    5. You need to have basic receipt of each sale (for example PayPal transaction with information enough)
    6. Only profit part of your business will be taxed, meaning that you must cut the expenses from that revenue and the portion left will be taxed.

    So in the end I have to establish a business in order to receive the profit that I get. The biggest issue is that if person does a business will person gain profit in such matter.
    Signature
    Discover How CPA Newbie Made First $400 In Just Few Days On Autopilot! - Get Your FREE Copy Now For Exclusive Time Only
    {{ DiscussionBoard.errors[10045622].message }}
  • Profile picture of the author Path Theory
    It's better to form a business, because it's much easier to write off expenses and such. You can save a lot of money if you do your due diligence.

    I pay my taxes quarterly so I don't have to worry about it at the end of the year and end up owing a ridiculous amount.
    Signature

    Dental Floss Tycoon

    {{ DiscussionBoard.errors[10045645].message }}
  • Profile picture of the author franchiseguy
    Canada - depending on your earnings you may choose to incorporate. Under $500,000 a year you are considered small business and subject to much lower tax rates 12-15% depending on your province. That is compared to the much higher personal tax rate. The issue is when you withdraw the money you have to pay tax again as personal income.
    Over $500,000 yearly while you are not required to incorporate the taxes will kill you.
    Of course each situation is different depending on your expenses, tax rates, income etc..... so money invested in a GOOD accountant will be well spent. I would suggest possibly 100K and under you may be better served not incorporating as there are annual ongoing filing expenses associated with the incorporation.

    Beyond the financial standpoint there is also a level of legal protection with a corporation in that your own assets are protected. But that is a whole other story.

    I am not an accountant so please treat this information as such.
    {{ DiscussionBoard.errors[10045660].message }}

Trending Topics