As the world is advancing, so are we developing and pacing forward with the changing landscape. Even business today is not as easy as it was a few years ago. In this digitized era, businessmen are moving towards the online market to sell their goods and services. Today, eCommerce sites have taken over the entire market and transactions are done electronically via mobile applications. Ecommerce sellers take all the lucrative steps to reveal their products appealingly. Selling things online is pretty easy but are you aware of the several implications of tax. Be it the direct or indirect tax, a payer always wants to save money and get rid of unnecessary headaches.
Also Read: Best Tax Saving Practices For Shop Owners
The tax rate for different products vary. Nowadays, specific software is available that provides the complete tax chart as per the sale of the business. But are you practicing the right tax-saving methods? Follow these tips to get better benefits:
- The right accounting method for inventory should be followed:
From time to time, changes keep on taking place in inventory accounting. How you treat the inventory plays a vital role. Basically, taxes are calculated on the overall profit of the business. In some way or the other, inventories greatly impact the firm’s profit. In an eCommerce business, a proper analysis should be made.
Also Read: Best Tax Saving Practice For Travel Agencies
- Packaging cost:
Whichever material you use for packing to deliver the product safely to the customers, you can deduct its cost while filing a tax return. Packing materials include— boxes, markers, envelops, tape, paper, markers, printer ink, labels, cartons and alike.
- Professional services:
The cost of professional services like bookkeepers, tax consultant fees and accounting can also be deducted. The expenses that you incur in consulting the accountants to seek advice can be deducted during tax evaluation. The fees of the online bookkeeping services are also regarded as deductible expenses of the eCommerce business.
Also Read: Best Tax Saving Practice For Restaurants
- Website fees:
Renowned sites provide all the essential tools that help in operating an online store. Without an online presence, you would surely not be able to run an eCommerce business. If you didn’t know, web hosting and domains are also tax-deductible expenses. Apart from just operating an online business, the cost of services incurred in engaging with the customers is also deductible. In other words, if you want to optimize your site, you can deduct the cost of SEO tools or published newsletters, rate of email marketing solutions can be deducted and much more.
Also Read: Why Income Tax Return Filing Is Important
- Workspace charges:
If you use your home as an office, it can be qualified as eCommerce deduction but you need to fulfill the following requirements:
- The given space should only be used for performing business activities and not used for any household chores.
- It should be the principal place for carrying business activities. It should be proved through a consistent and printed schedule.
- Most of the time that you are spending in the house should be allotted to your work area.
If you are using your home as a work area, certain utilities like water, heat, and electricity are deducted from the tax return. To calculate the expenses of a home office, follow the regular method. Certain repair and replacements in the home office space can be regarded as expenses against tax return. These improvements are generally classified as the restoration, betterment, and adaptation for ensuring better functioning of the business.
Also Read: 9 Common Tax Mistakes You Should Never Make
- Follow the right technique
You need to consult your accountant to choose the right and best technique for saving tax. Proper accounting methods that are fair and transparent should be approached. With no collateral, minimum documentation, and availability of several top lenders, Indifi makes the whole process of acquiring a loan simple and quick. With a single online application form, you can apply for a loan from multiple lenders in the least possible time. As the loan is customized as per the needs of online sellers, rest assured that it would perfectly suit the dynamic needs of your business.