Taxes selling virtual online

[georgialiving]

Hello friends.

I have a question I can't find a great answer to. Maybe I'm not even looking correctly! I was hoping to get a better understanding of the tax implications of a business I am starting.

It's basically selling FaceTime/Skype calls. (In a classy manner) So it's not something tangible. How do state and federal taxes work for something like that? Is that too broad? Where should I start searching for information? Should I call a CPA?

Thanks!


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[seattlecyclone]

In a nutshell, you pay tax on all the money your business brings in minus any legitimate business expenses. You'll owe 14.3% self-employment tax on this money, plus regular income tax, plus any state taxes. Meeting with a CPA may not be a bad idea.

[terran]

Sounds like you're selling a service (like some kind of consulting), so there's no sales tax involved which is the only way the virtual aspect might matter. You'll have to pay your normal state and federal income taxes on the income and you'll also have to pay self employment tax (both the employee and employer portions of FICA), so that's another 15.3% of your net business income. If you make over 118.5k between your regular job and this business the employee side of the self employment tax rate goes down since that the social security income limit.