Posted in Lifelong Learning, MoneyMatters, Taking Care of Business

How to make it your Business – Your name and your tax

Protect your name and likewise protect your brand, your business.

You are done dreaming and ready to make your dream your reality and even better, a money making venture sounds good.  You can feel the excitement bubbling in your gut as you think up different variations on the name for your businesse? but wait a minute, what is the next step?

What to do and where to look?

Brick and Mortar versus Click and Mortar

Click-and-Mortar-Web-to-Store

A brick and mortar business has a physical storefront but with a Click and Mortar business, one with a virtual store front, what if any are the additional considerations?

1) Online Business Name Registration –  Would it not be great if one could go with the first name that comes to mind.  However, in the real world, to minimize future headaches, a wise step to take to avert potential legal action against unauthorized use of an already existing business name is to to conduct a search,  before getting attached to any one name.

Your Name, Your Reputation is the foundation for your brand

Where to Look?

For one thing your name is your business’ greatest asset, and settling on a business name moves one closer to beginning the registration process.  A good starting point may be a general search on Google.com, and any of the other free trade name, trademark or and domain name websites.  Here is a list of other resources.

i) Domain name Registrar – The domain name is the  web address of an online business and the first step towards setting up shop for an online business is to have the domain name registered.  Domain names can be checked out with the domain registrar.  For example GoDaddy.com offers services related to domain names and website builders.  Domain availability for your potential names can be searched for at a domain name seller.  For example the whois.com lookup provides information on who owns the domain name and if it is a name of business.

ii) Search Secretary of State Database – for corporate entities, LLC, LLP or other like taxable entities.  For  legal and business reasons, a lot of businesses incorporate in Delaware (DE), so it is beneficial to check out the Delaware’s Department of State, Division of Corporations “Name Availability Search” page and at a minimum the agency equivalent for the state where you plan to run the business.

iii) County Clerk’s Office – Search  for Assumed or “doing business as” (dba) as well.

iv) The State’s Department of Revenue

v) USPTO – Trademarks registered with the USPTO.  Click on Search Marks which pulls up the Trademark Electronic Search System (TESS)

vi) Telephone Directories – Look over published telephone directories and Local Phone book.  Online Phone Listing Service (yp.com) which allows searches based on region, industry or and category.

There are also a number of trademark search services that also assist with the name registration process such as Markify.com.  Markify’s free search engine covers both US and International trade names.

The Federal Trade Commission (FTC) is the primary federal agency that regulates online business activities.

2) Sales and Use Tax

Unlike a brick and mortar store where taxes are based on the tax rate of that locality with an online business, the buyer and seller may be located in different localities and that is where the rules vary.

According to Marketplace Fairness Act, which was recently passed by the Senate, if approved by the House would grant states the authority to compel online businesses with a physical presence be it a physical storefront, distributor or warehouse,  to collect applicable state and local sales taxes.

Sales and Use Tax blocks
Sales and Use Tax blocks

Unlike a brick and mortar store where taxes are based on the tax rate of that locality with an  online-only internet business, where the buyer and seller may be in different states, the rules are different.

Of the 45 states and the District of Columbia  that currently have taxes, the MFA would  require collection of  taxes on online purchases made by their residents at the time of a transaction, provided such states have simplified their sales tax laws.

How about states that have no sales tax?

For purchases made by Alaska, Delaware, Montana, New Hampshire and Oregon residents, they will not be charged sales tax for goods shipped to their home state.

Businesses in these states will have to collect sales taxes for items shipped to other places with a sales tax.  The law would require online retailer with an in-state affiliate such as marketers who link to the retailer’s site to collect taxes.

To be sure if any of these rules apply to an online business, contact the state’s revenue agency.

Use Tax
Use Tax
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Author:

Broad based knowledge seeker; outside and beyond the box - arts and culture, travel, writing, christian faith walk, good reads and refreshing conversation - and not necessarily in that order. Storytelling by connecting the dots between the traditional and non-traditional, the obvious and not so obvious.

3 thoughts on “How to make it your Business – Your name and your tax

    1. A distributor may be able to show by providing a Resale Certificate
      “A business which is registered for sales and use tax can use a resale certificate only when the merchandise being purchased is to be resold by the business. A business cannot use a resale certificate to purchase merchandise that they will use and consume in the conduct of business” (Sales Tax Institute)

      Resale Certificate- Certifying that the taxable items will be resold, rented or leased within the identified geographical limits in their present form or attached to other taxable items to be sold. The understanding is that to make any use of the items other than retention, demonstration or display while holding them for sale, lease or rental, sales tax is due based upon either the purchase price or the fair market rental value for the period of time used.

      1. Sales Tax applies to retail transactions in the state. Use tax applies to tangible personal property that is used, consumed, or stored in this state.

        Consumer’s use tax applies to purchases from out-of-state vendors that are not required to collect tax on their sales.

        Sales tax and the use tax are “mutually exclusive” – either sales tax or use tax applies to a single transaction, but not both.

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