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Ebooks and Taxes: overview

September 6 2003 at 2:22 PM
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  (Login jeremysa)
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Response to Ebooks and taxes

 

I'm not writing this as an accountant or attorney---just as an informed layperson.

There are two different kinds of taxes at issue, sales tax and income tax.

Income tax is owed regardless of how you earn it (with some exceptions that aren't relevant here). Whether you sell ebooks, CDs, bicycles, or massages--you'll owe income tax on your net income. As a business owner, you'll have mnay opportunities for deductions not available to wage earners--this is a subject entirely unto itself.

As a business owner, you only have to collect sales taxes on sales to customers within states that you have a physical presence. For a home business owner, that means your home state. There's some debate over whether you actually need to charge and pay sales tax on intangible items (like a downloadable Ebook). Many companies don't charge at all. Others simply locate their internet business (hosting account) in a state that doesn't have a sales tax (New Hampshire comes to mind).



Jeremy Salvatori

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