Pros and Cons of Internet Sales Tax

Internet sales tax hit online entrepreneurs hard. This is not a Federal tax it’s a state tax. Every company must collect sales tax in any state it has a significant business presence in. At the end of January, they have to file their sales tax and dispense the money they collected for the state.The new penny

There are some advantages to Internet sales tax and some disadvantages. We are going to discuss them.

Funds for the State

It prevents cuts to public services because the state government has a new form of income.

Prices Don’t Always Go Up

Contrary to popular belief, prices don’t necessarily go up. Many businesses simply leave their prices stagnant and take the money out of their profits. This can be interpreted as both a good thing and a bad thing.

Hindering Free Market Forces

It can be argued that companies that can absorb a sales tax price hike have an unfair advantage over those small businesses that can’t. This is hindering free market forces and is against the American state of mind.

More Tax Hassle

It’s just yet more paperwork that businesses have to worry about. Instead of focusing on customers, they have to continue to partition their money in order to address yet another tax.

Internet Sales Tax in Brief

Every state sets their rate of sales tax. Whether you agree with it or not, this is something that’s here to stay. Make sure you pick up a permit before you begin collecting sales tax. It’s necessary to do this or you’re technically committing fraud.

Image credit: Alejandro Mallea

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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