I have an online business that does not have employees (except myself). Do i have to pay federal taxes? Does signing up for a federal tax ID begin the stages where I have to pay taxes? We are a online reseller of bags in California.
Thanks.
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I believe if you make over $600 you have to pay taxes.
Yes and California has many ways of taxing you too. What r u registered as in California? What kind of entity?
Yes, but it might be helpful to clarify what kind of taxes.
It sounds like you are a sole proprietor, that you haven’t incorporated. If not, then any income earned by you (receipts less deductible expenses) will be taxed as income on your personal tax return. Also, you will have to pay your portion of medicare and social security taxes using schedule SE (which goes along with your personal return).
IF you have incorporated your business, then it is a little different. Depending on the organization, you will either pay the tax at corporate level or it will be passed down as income to you (which will be taxed just like my example above). If this is the scenario, then I’d consult a CPA to help guide you through things.
Any time you pay an employee, even if it is yourself, you’ll have to pay the OASDI or social security taxes and the medicare taxes. But this depends on how your company is organized which will determine when and where you pay it.
Also, there are the CA taxes which are similar (with exceptions) at the different levels.
Remember, for tax accountants more detail is good.