The online world is growing very rapidly. How rapidly, you ask? Approximately over 9 million pages every day! As a result, there are currently more than 5.2 billion pages on the Internet. Given its 65% annual growth, it’s quite obvious that more and more people are going online with each passing day. 

Taxation and Online Shops: Points You Need To Know

The online world is enriched with every click, every email, and every Facebook post. The virtual world now holds a practically boundless amount of information in its pages. But aside from being a source of information, the Internet also makes commerce work better. As we all know, the law of supply and demand is one of the basic rules of economy. Sometimes, however, it’s not really the minimal supply that causes the problem; it’s the difficulty in moving such supplies from their production site to the selling site. 

But with the Internet, it is now much easier for merchants to sell their goods directly to the customers with just a simple post and click. This eliminates the need for a physical store. Since this setup is quite out of the ordinary, some online sellers, especially the small ones, ask if they still need to pay tax.

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Every business operating legally must pay taxes to the government. Taxation is imposed and regulated by the Internal Revenue Service or more commonly known as the IRS, a federal agency. 

The IRS demands that all persons and businesses — regardless of size and nature — submit a report detailing their assets. One of the forms required by the IRS is the Wage and Tax Statement also known as the W-2. Fortunately, a quick and easy W2 maker is readily available on, you guessed it, the Internet.

Sales tax can vary from one state to another, and the amount frequently changes due to several circumstances such as the prominence of e-Commerce in a particular state or the imposition of special laws that cover online shops. 

Of course, there are differences between physical products and digital products; such differences must be laid out when filling out the necessary forms. Doing e-Commerce is quite difficult for most people, but once you get the hang of it, everything will be smooth sailing and the profits start rolling in. Still, the best way to submit your due taxes is to consult your tax advisor or CPA.


When you pay tax on the profits of e-Commerce business, how do you determine how much you need to pay? Of course, there’s a need to look at the revenue and your general profit. Also, you need to keep a close track of your expenses. Like a regular business, an online shop—despite the lack of a physical store—is still subject to the country’s laws, and some of its expenses can be deducted from the taxable amount.

In sum, paying taxes is a must even if you are an online shop. Never try to get away without paying. Always keep in mind that business tax evasion is illegal and is punishable by law in virtually all countries. Don’t even try to find a loophole. Just don’t.