E-commerce has seen tremendous growth over the past couple of years. The recent pandemic provided an unprecedented opportunity for those looking to set up their online businesses. In saying that, operating an online business is not an easy task. You must comply with the various rules and regulations and are still liable to pay taxes on the goods and services.
However, there is a grey area in paying taxes as an online seller. HMRC determines your tax and filing status according to your earnings and intentions. Hiring a chartered tax advisor who can help you understand your tax responsibilities as an online seller is always beneficial. As an online seller, you might have many questions surrounding taxation. We’ll aim to provide answers to the frequently asked taxations questions asked by online sellers.
Do I Need to Pay Taxes?
The first question is whether you need to pay taxes as an online seller or not? The short answer is yes. As an online seller, you fall into the self-employed category, and therefore, you’d need to pay your taxes. In saying that, you’d need to register with the HMRC and complete a self-assessment tax return.
Get the help of a chartered accountant to help you in filings so that you don’t make any errors. If you’re making a one-off sale or getting rid of your old items that are not part of any business activity, you don’t need to pay tax as a self-employed individual.
Do I Need to Keep Records?
Another question that sellers frequently ask is whether you need to keep records. The answer to this question is that you need to keep records as it will help you with all your compliance-related matters. If the officials at HMRC conduct an audit into your finances at any point in time, you’ll need to provide them with all the records, invoices, and other paperwork to show that you’re complying with all the rules. Record keeping is always a good practice. It ensures that all your tax returns are error-free and accurate.
What Are the Taxes That Would Need to Be Paid?
Another burgeoning question that online sellers ask is the type of tax they need to pay for their business. The answer depends on the structure of your online business. Income and corporation taxes are the most common ones that come into mind when operating any business. VAT may also be applicable, depending on your products and services.
If you operate a large online store with several employees, you’d need to take care of payroll taxes. Consult a tax advisor who can guide you accordingly and help you stay on top of your taxes.
Get Started with IBISS & CO
If you’re on the lookout for quality self-assessment & tax returns consulting in Walsall, check out the services provided by IBISS & CO.We have established ourselves as one of the best personal tax advisors in the UK. We can provide you with specialist tax advice on your online business and ensure you don’t get audited by the HMRC. You can contact us today for more information.