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Paying U.S taxes on money earned through Paypal

Discussion in 'Business & Tax Advice' started by lightning.god.zeus, May 8, 2011.

  1. lightning.god.zeus

    lightning.god.zeus Junior Member

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    Occupation:
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    So I recently started a small internet business, just a small writing service. My earnings aren't significant. So far I'm earning less than $500 USD monthly but I'm just wondering how the U.S. government will tax me at the end of the year. I'm not incorporated or anything like that so will they just tax all of the income? I do manage a small team of employees that I dish out weekly payroll for so is there anyway I can deduct that even though I'm not an "official" business? I just don't want to owe Uncle Sam a ton of money at the end of the tax year.
     
  2. richelld

    richelld Junior Member

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    yup your getting owned. just setup a business license overseas in a 3rd world country where noone pays taxes like philippines. call yourself a director and open a US bank account.
    use the company debit card for everything you need and when you do your taxes claim you work for an overseas company earning $5 a day
     
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  3. jonnyquest

    jonnyquest Regular Member

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    You are an official business, period. You are accepting payment from others and providing them with goods and services.

    If you have "employees" you had better be paying their portion of Social Security and deducting their portion from the weekly payroll checks
    including your wages.

    As a sole proprietor you can deduct lots of stuff ... just go to irs.gov

    The only way to avoid paying "ton of money" is to show a legitimate loss on your Schedule C, but you will never avoid having to pay Social Security taxes even with a loss.

    Get a hold of a CPA and ask lots of questions.

    JQ
     
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  4. naturalbornthriller

    naturalbornthriller BANNED BANNED

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    You will be charged at the personal tax rate(10%-35% depending on your income), similar to what you pay when you work a job. Everything you earn for the year will be taxed collectively.

    There are countries you can incorporate in where there are ZERO taxes. Everything has to be done in that country though. You could: Incorporate in say the United Arab Emirates which has no corporate tax. You would also need to set-up a bank account there, and all your financial transactions would need to be done through the overseas bank. Money can't go through a US bank or it would be considered tax evasion. You would probably need some sort of a business location or address in that country as well, even if you are never there. You can still have a US based location that acts as part of your overseas business to handle things in the US.

    You could always incorporate in the US(Nevada or Deleware), and then when you can afford it, re-incorporate overseas. Many companies have done that(TYCO, Stanley Tools). You can also google "qwealthreport" for some additional info. The free reports are excellent, or you can choose to pay for a program or something if you decide to. Good luck, and I hope you save a bunch of money.
     
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  5. KeyzDT

    KeyzDT Power Member

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    I made just over 9K last year from my website alone which I have set up at a home based business. I received close to 2k back for a tax refund. the fact that is a home based business means nothing. Just matters how much you make. 500 a month? you will be fine.
     
  6. Rubix101

    Rubix101 Regular Member

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    If you're only earning $500 per month you're probably not going to have to pay that much in taxes anyway. You don't earn enough. But if you're outsourcing work you can write that off. You can also write off half your rent if you're working from home, your internet, cell phone, half your dinners as well as your drinking habit. If you're smart enough you can pay close to zero taxes- it's all about the write-off. Use it.
     
  7. volund

    volund Senior Member

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    Well for $500 a month you are not going to pay a huge amount in taxes to start with but remember you only pay on profit not sales. Keep track of every legitimate business expense as these will lower your taxes owed.

    I personally would not bother with the overseas thing until you have quite a bit more coming in that you do as there are easier and cheaper ways to cut back on taxes first. If you get to the point of not getting enough deductions as a sole-proprietorship than incorporating or an LLC might be in order. When you think you are at that point it is time to talk to a professional.

    Are your employee's actually on a payroll or are they independent contractors? However you are doing it you need to make sure that you are doing the paperwork properly. This could be a huge legal liability if you screw this one up so I would pay for an accountant to make sure you have this setup properly.


    When taking deductions anything legitimate is is fair game but be careful that you have a reasonable excuse for the deduction. Nothing wrong with being a bit aggressive but you always want to stay in the gray area and never wander into the tax evasion area. For the amount of income and taxes you are talking about (low) there is really no need to do anything crazy to try and save a few bucks as the risk vs reward just does not balance out.

    Be very careful about taking the home office deduction. The rules for this are very strict and over 90% of the people who take it do not qualify. The irs knows this so taking that deduction greatly increases your chances of an audit. This is low hanging fruit for them, they know that almost every audit they do when it is used will result in being able to collect more tax money. Unless you are 100% sure you qualify and you are pretty sure the rest of your deductions will stand an audit do not use it.


     
  8. anonym0use

    anonym0use Newbie

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    F*** the IRS. Google Ron Paul people, wake up... the govt doesnt own us.
     
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