I've got an Internet site setup where people can buy my software for $10 per copy. I handle all my transactions through PayPal, so they deal with credit cards and bank accounts. I know that the Internet is tax free while buying things (in most states), but what about people selling things? I just want to know what I need to file, if anything.

I'm only 17 years old right now and I just got my first real job mid January, so I don't have any W2s for 2003. My first transaction for my website was made on November 13th, 2003 and through December 31th, 2003 I made $231.57. January 1st, 2004 through today I've made $75.77.

Do I need to file any special papers or anything? Isn't it true if you don't make $500 in any one year you don't have to file? If someone could help me out, it'd be appreciated!

P.S. I live in Louisiana if that is relevant.

Someone else might be a bit more familiar with LA, but I think that it is 4% - basically this means that if you sell to someone in LA, then you should charge 4%. I know this is the case in CA but the charge is more like 8.25%

As far as the amount you make I do not know. That seems about right but I bet someone else on here will have some more information on it. I doubt you have anything to worry about from last year though.

I pretty sure the rule is if your operating within a state you have to charge tax to residents of that state when they make orders. So anyone from your state who places an order has to pay taxes. It might depend on the size of the business or how much business you do.

As for income taxes I'll let one of the experts answer that one.

LlamaGuy, the people who mentioned here that you need to charge Sales Tax if your client orders from within the same state that you are located. However, I believe this is only true for physical products which you deliver.

If your product is Electronic, i.e. your customers can download it directly from your site then you do not need to charge Sales Tax. If you send CD copies of your software to your clients within LA then you will need to charge Sales Tax which you must later pay to the government.

Whoa whoa whoa, do I need to pay any tax or register a business if I'm only selling electronicly?

I think you would have to pay to the government the Sales Tax you collect from your customers. Maybe you should ask a tax accountant to be certain.

There are lots of information on www.irs.gov

I'm not sure about the US, but in Canada, you only have to charge taxes and get a GST number (tax number) if you gross more than $30,000Cdn/year. At that point, if you're selling your product to a Canadian, you have to charge GST (the country-wide tax). If you're selling to someone in your province (Canadian version of a state, if you were unaware), you also have to charge them the province tax.

For example. I'm in Ontario, Canada. If I sell my product/service to someone in California, I don't have to charge them any tax. If I sell to someone in Vancouver (in BC - not the same province as me), I just have to charge them GST. If I sell something to someone in Toronto (the same province as me), I have to charge them GST and PST (both the country and the province sales tax).

From what I understand and have experienced while living in the states, the same sort of concept applies as well, though I am not sure if there is a gross minimum or not, like there is here. For example, if you look on certain sites, you'll notice if they're based out of California, Cal. resisdents usually have to pay 8.25% tax (or whatever the tax is).
Hope that helps.