City business tax & legal business requirements

taxes

#1

Nobody ever mentioned it on Spreadshirt, but this year I had to pay back taxes and interest and penalties for city business tax for the past 8 years. The total bill was $850. You guys need to check with your city and state to find out if there’s any business tax that you need to pay for making money on spreadshirt and what other legal requirements there are from your city & state for making money online.


#2

This is basic business 101.


#3

That’s kind of rude and annoying that you seem to be dismissing my post by saying it’s just basic info for beginners. And that doesn’t mean that Spreadshirt shouldn’t mention it in their FAQ. There are many people who don’t know about it. I know someone on youtube who made tons of money from youtube, enough to buy a house, and also paid a tax attorney, but his tax attorney didn’t tell him about the state business tax after he moved to Washington, and now he owes 3 yrs back taxes including penalties and interest and is very worried about it. So even if you pay a professional to deal with taxes, they won’t necessarily tell you everything you need to know about city & state business taxes.

Spreadshirt should put a warning in their FAQ to tell people that they probably have to pay city and/or state business tax. I had to pay hundreds of dollars in interest and penalties because they neglected to inform anyone. I am not asking Spreadshirt to be tax advisors, but to simply warn people and make them aware that they need to look into city & state business taxes & legal requirements for business, since I’m sure many people who make money online are not aware if them.

Learning about legal business requirements is something people would expect to do if they start a brick and mortar business and hire employees, but it’s something many people don’t think about and don’t know about when all they are doing is working alone in their home and making money on the internet in partnership with a big business. All they focus on legally is paying income tax. Most such people probably don’t think of themselves as a real business.


#4

@Billionaire You took what I said to be a slight against you when in fact I agree with you!


#5

That’s interesting. I already pay those things (business license, state tax) because this is an offshoot of my graphic design business. It wouldn’t have occurred to me to go looking for more people to pay if my tax person never brought it up.


#6

Whoa… I’ve always filed this as a “commission” under earnings I believe with my taxes - I always file my earnings as long as I made enough to file… I wouldn’t think you would need to pay business taxes unless you actually owned a business or are operating under a business tax ID # but may depend on the state…I know Spreadshirt changed the wording on the tax form though… I think it used to be “commission” I’m not sure what it is now… ugh I may have to look into that…


#7

Check out our recent blogpost: https://www.spreadshirt.com/blog/2017/11/15/spreadshirt-taxes-everything-need-know/

Hope this helps :sunny:


#8

So I think Spreadshirt has my W9 information… I don’t think I filled a W9 out before for Spreadshirt - I mean I may have, but do I have to? I’ve been a partner since 2009… Everything else sounds familiar to me… I always get my tax documents… I’m not emailing a document with my SSN number on it. Fax maybe, e-mail, no.


#9

Same here, I’ve always filed it as “Commission”. I’ve been a partner since 2009-10.


#11

A few tips from another random person on the internet :wink:

If you make enough to get a 1099-MISC from SP, then you definitely have to report on federal /state tax because SP already reported that to them for you. Reporting 1099’s directly to the IRS became mandatory a few years ago.

The IRS, as well as your local state/municipality etc. make a distinction between a ‘hobby’ and a ‘business’.
https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

In the old days the threshhold for putting your activities on the radar for the ‘business’ question was thought to be in the neighbourhood of the 1099 reporting limit, $600.

If it’s a ‘hobby’ you need to report the money and pay tax but you aren’t necessarily running a business. If you make a lot of money and/or are meeting the IRS criteria for a business, then you are potentially fair game for anyone who wants to tax you, starting with the IRS and working it’s way down. And it’s not just the tax, it’s business licensing, state tax licensing and reporting, all the stuff that’s part of running a business.

If you are in any doubt, then you need to ask an accountant or else you can end up in an expensive situation, as some are finding out. Either way, you should know what side of the fence you are on, and keep enough records to back it up if someone asks questions.