Sales tax?

#1 Well this depends. I see you live in Ca so it could be different... Have you registered yourself as a business in Ca? If so you'll pay the tax through there and it'll come out of the sales you have. Some places (such as WV) do not make you pay the tax if you make under $4000 a year.

Otherwise you'll report the "income" from the sales and pay it as part as your own income tax, usually to the state.

Once again it oculd be different there in Ca. I'd contact your state's tax department as ask them. But as far as the actual question, you do not have to set up anything particular.

I stress for the last time though just double check with the state tax department.

#2 Thanks for the response. I have registered as a business in CA. I'll definitely double-check with the tax department. In general, is the sales tax you have to pay for every purchase dependent on the location of the purchaser? Do I have to track where each of my sales are being purchased from?

#3 I don't think you have to charge sales tax if you are an internet business. The taxes you pay (which would normally come from sales tax) are dependent on the amount you make. So what you could do is just throw a few extra dollars on the price of the game to cover this tax.

Some states however I think do require you to collect sales tax regardless. Its kinda why you see in some commericals selling products or even some websites (rare) "XX and XX residents must include X% sales tax."

But I don't think you have to worry about calculating a tax and keeping track of each customer's state and so forth. Just maybe add $2 to the price of the game and put that $2 back to pay your tax.

#4 Hi Vijay,

Myself Brajendu(from India). I've a small indie company(homegrown), we developed a 3D game based on TGE recently. We're alss looking for business. I was thinking of selling the game through download.com. After seeing your post here, I am more confident about doing it.

Can U just let me know in brief that how much royalty they give us?... I'm also concerned about the tax matter U R asking here. Does the same tax rule applied here in India too?

I'm also thnkfull to Chip Lambert for his valuable comments. Chip, can U give me some info too ?(I live in india, and I've not registered any company so far)

Thanks Vijay (R U indian?)
Brajendu

#5 In the U.S., you generally have to charge sales tax only to people in the same state who buy your product when you're selling something online or through mail order.

I think there's at least one state that has changed this though, but I can't remember which one.

#6 Most states still require you to pay taxes however on the income you generate. This amount varies from state to state. Its not sales tax but still taxes you have to pay. I'm not sure of India tax laws, look around on India government sites and you should be able to see their laws and fees. If you're unsure, you could always contact a government official and I'm sure they'd be able to help you.

#7 Okay,

I have been in business for almost 15 years, here is how it work in Canada.

Sales tax is collected at "The address of the store" and paid to the province/state it is registered to. Now here is what I have done, I charge whatever the sales tax is in the area is. Now with non-physical products such as software I have been burned in that where Digital Awakenings is registered Provincial tax is 7% and national tax is 7% so it's 14%. Some areas have less tax so it came out of my pocket.

Here's how I solved it, I added the tax into the purchase price. Then just charged the base price. When I registered the company (and then again when I incorporated) I was asked to choose a "Filing period". In Canada this is the interval in which I report the companies income and amount of taxes collected. So for example my filing period is quarterly, so every three months I have to send a cheque to the government for the taxes I have collected. Till then it is the best interest free loan your ever going to get. On that note the longer between filing periods the more interest you collect on the taxes you have collected (yeah you!). However if youre not good with money it is more opportunity for you to spend money that isnt yours.

I also reccommend have two corporate accounts, the one your operating account, principal of youre sales goes here. Another account (high interest saving idealy) where all your tax money goes into. That way when it comes time to pay the man you know you have the money (They arnt friendly when you dont).

The Trusted One

#8 In the U.S., you have to pay income tax on your income regardless of sales tax. You also have to pay social security and medicare taxes if you have a sole proprietorship (or a partnership). If you have a corporation, you pay corporation income tax and then pay income tax, social security, and medicare taxes on the money you pay to yourself.

Aside from federal income tax, there's also state and local income tax.

There's no federal sales tax in the U.S., but most (perhaps all) states have state sales tax of some kind. There's local sales tax in some places too.

By the way, you probably have to register with your state to get a sales tax ID so that you can remit sales tax. I know you have to do this in Pennsylvania.

Other countries probably have completely different rules.

#9 I don't think that this is the record necro-post, but it sure is close I'll bet.

And to stay on topic, a lot of states now require that the customer pay sales tax on items bought over the internet, even from different states. But it's not easy to enforce though, so they are starting to go after the companies that sell online and make them pay.