Taxing Your EBay Profits
Taxing your eBay profits is something you cannot just forget to do. An omission on this issue might get you into a legal problem. The first quarter of the New Year always fills everyone with fear. It is the time for you to give a part of your earnings to Uncle Sam. This is the time when your email inbox would be flooded with questions on business taxes and IRS. However, the IRS has always been like a parasite, living of more than just the blood of us people.
EIN - Why Apply?
Since we have gone through the IRS hurdles, here are some demo questions to help you cope up with it in a positive way. The first question is:
Q: What is an EIN number and why do I need it? I have just started a small retail business.
A: The IRS identifies your business not by its name but by the EIN number. EIN basically stands for Employer Identification Number and is also known as the federal tax ID number. The EIN is a nine-digit number that is assigned by the IRS to various businesses. They use this number to identify taxpayers who are required to file their business tax returns.
Q2. How do you know that you need an EIN?
A2. You will need an EIN only if the IRS thinks that:
*You have employees working for your business establishment
*If your business is a partnership or a corporation
*If you are filing returns with respect to Employment, Tobacco, Excise, Firearms or Alcohol
*If at any point in time, you happen to withhold taxes on income (other than wages) paid to non-resident nationals.
*If your business has a Keogh plan and lastly
*If you are dealing in the business of trust, estate, and real estate mortgage investment conduits, non-profit, farmers' cooperatives, or plan administrators then you will definitely need an EIN.
Applying for an EIN is a usually a painless task and you can use different methods to procure an EIN. You can apply online at the IRS website (irs.gov) and apply through mail or by telephone. If you are doing business in a state that participates in the Federal Employer Identification Number project then you can apply through you local IRS office.
They say IRS has a nose that can smell you out from miles away. If you are in time and labor intensive business then the IRS might think that you operate the business for profit and not fun. Moreover, this is enough for them to charge you with a tax slap. If you want more details regarding your tax queries then you should speak with an accountant or a tax lawyer.
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