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I started an online company selling my own video games, software and clothes. I am using paypal to sell the items.
Now, when I sell items, come tax time how do I go about fileing this income?
Do I keep all of my records of sales and pay taxes on the income at that time?
Do I set the tax rate to my state and it's % and pay pal takes taxes?
Do I keep records and reciepts of items needed to produce and ship these products?
Again, I am new to this.
You need to find out what your states tax laws are. Depending on the state, you may be required to charge a flat percentage to any orders shipped to your state, or you may need to charge different amounts for each county. (Plus! sales tax might be a sliding scale not an exact percentage. For example, a sale of $1.01 at 8% tax could mean tax of 8¢ or maybe 9¢ because of the extra cent.)
If you need a quick answer -- setup Paypal to default to charging the sales tax for your state when the recipient's zip code is in your state.
Don't wait too long to find out the exact rules for your state because you may be required to pay the state monthly or quarterly, NOT annually.
An accountant can answer all your questions for a fee or you can contact your state government for the answers for free. Most states publish this information on their websites.