Whether you are running the business online or physically, you have to fulfil certain essential requirements. Online businesses have become a real change maker in the last few years, especially in the current pandemic. Online businesses have flourished rapidly in this time. Therefore, it has become very important to learn about the taxes that are part and parcel of these businesses. Like the other parts of the world, if you are running your business in Australia, it is important to know about the different taxes you are liable to pay.
If you are new to E-commerce and want to stay safe, here is the guide to knowing about all the essential taxes you are liable to pay, especially the online business tax. The sales tax is the most important in this list of taxes.
The three significant types of taxes include
- Estimated taxes
- Employment taxes
- Sales tax
What is sales tax?
Sales tax is also known as a pass-through tax that is a liability on the customers. It is a government decided percentage that is added to the bill a customer has to pay. After the customer has paid the sales tax, the owner must report the tax after collecting and depositing the taxes.
The businesses work as a bridge that keeps the consumers and the government-connected. After the products are delivered, the end user needs to pay the said amount of the tax. The retailer is a business owner who first buys and then resells the goods. They purchase the items wholesale. The price demanded by the retailers is higher than the purchase price. As the retailers sell the products, they charge the customers with the sales tax. The taxes are not charged twice, but they are charged only once on the end-user side. It is essential to learn about the sales tax for a successful business tax return.
Here are the important terms that you need to know in the context of the sales tax. These terms are often used while talking about online business tax.
Nexus is the factor that determines the time and amount of the sales tax. It refers to the presence of the store. The location of the business, the home state are all included in the nexus.
Origin sales tax means the amount collected based on where the seller is located. The tax has to be remitted in the native state.
Destination sales tax is based on the location of the buyer.
What if I don’t pay the sales tax?
Many business owners think that nothing bad will happen to the business if they do not pay the business tax return. It is essential to know that the online business is not exempted from the sales tax either. In the absence of the sales tax either collected or remitted, the business owner will face penalties or audits just like it happens in the physical business.