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Business License and Sellers Permit
by cheepcheepmovies, Window Shopper
- Created: September 14, 2012, 2:13 pm
- Updated: September 14, 2012, 2:19 pm
I have done some research and found that an online business without a
physical location does not have to charge sales tax in the state they reside
based on the Internet Tax Freedom Act.
This rule is based on a 1992 Supreme Court ruling (Quill v. North Dakota, 504
U.S. 298, (1992)) in which the justices ruled that states cannot require
mail-order businesses, and by extension, online retailers to collect sales
tax unless they have a physical presence in the state. The Court reasoned
that forcing sellers to comply with over 7,500 tax jurisdictions was too
complex for sellers to manage, and would put a strain on interstate commerce.
I have a website as a store front and no physical presence and I am concerned
a general business license and sellers permit is required. The business is a
Sole Proprietorship with no employees. I currently live in Santa Fe, NM; so I
called Accounts Receivable per the Santa Fe, NM Official Website with my
questions and got very little information from them. I advised them the
business was an online business with no physical location. The man I spoke to
advised I do need a business license but did not know anything about a
sellers permit or taxation.
I do understand that at a federal level I am considered a Hobby and any
profit over $400 would need to be reported on my personal income tax.
The definition of a business in Santa Fe means an activity or enterprise for
financial gain, benefit, advantage or livelihood.
I also found:
It is unlawful for any person to engage in the businesses, professions or
trades defined in this section as requiring a license, within the corporate
limits of the city, without first obtaining a license as prescribed by this
section and pursuant to Section 3-38-1 NMSA 1978
This all leads me to believe I need a local business license, so I downloaded
the registration form and looked at the fees:
Business Registration: $35.00
(Businesses that have a physical location within the city limits are required
to have a business registration)
Business License: $10.00
(Business that are located outside of the city limits but do come in the city
limits to conduct business are required to establish a City of Santa Fe
Business License)
I do not have a physical location within the city limits (description for the
Business Registration fee) or am I located outside the city limits but come
into city limits to conduct business (description for the Business License
fee)
I am a bit confused and looking for some answers.
Do I need a business license for a sole proprietorship with an online store
front with no physical presence in New Mexico?
Do I need a sellers permit for a sole proprietorship with an online store
front with no physical presence in New Mexico to sell retail items purchased
from wholesalers?
-Thanks
SBA Community
BizResearcher | Window Shopper | 9/18/2012 - 12:06 pm
location. Your home or wherever you operate your website from is your
physical location for licensing purposes. That is the address you will use on
your DBA application if you haven't yet obtained one.
Cities issue business licenses, not states. Some cities license all business
activities; others license only select activities. A quick call to your city
clerk's office can provide the information you need. It appears from what you
stated that Santa Fe requires all businesses, regardless of location, to have
a local business license if they do business in the city. Therefore, you will
need one.
You mention the IRS definition of a hobby business. If you make only
occasional sales, you may qualify as a hobby business. In that case, you
would not register a business name and you may or may not need a business
license. Hobby businesses are most often associated with activities like an
artist who sells an occasional painting. If you have a website and are
representing yourself as a business, then you may not qualify as a hobby
business.
As KMurray mentioned, you may want to visit with a counselor at a small
business development center or a SCORE office. Their services are free and
they can help you set up your business in compliance with your local and
state laws.
cheepcheepmovies | Window Shopper | 9/18/2012 - 2:14 pm
do now, in fact have to charge NM state tax. I have asked SCORE this question
and if a sellers permit is also required.
kmurray | Community Moderator | 9/18/2012 - 10:29 am
cheepcheepmovies | Window Shopper | 9/18/2012 - 2:08 pm
their response.
kmurray | Community Moderator | 9/19/2012 - 9:52 am
Mark T | Window Shopper | 9/17/2012 - 11:37 am
are earning a certain limit depending on the rules for tax in your location.
You may not be paying taxes for properties you use on your business but as a
business owner you will need license to operate and probably extend you
business nationwide or international. You may better check you local business
admin or state department to better have an information regarding your
business needs.
cheepcheepmovies | Window Shopper | 9/18/2012 - 2:10 pm
business license period and it sounds like one of those better to be safe
than sorry situations anyway. I am now working with SCORE to better
understand these legal requirements.
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