If anybody needs this while bitspend is down PM me friday. I would be able to do it now, but I seem to have developed this compulsion for dumping my disposable income into bitcoin...
Seems like it would be an easy enough business to get started with...
and I bet it would do a whole lot for the bitcoin economy.
Topic: What legally prevents a business forming that lets you buy anything with bitcoin (Read 3112 times)
March 10, 2013, 03:29:03 AM
March 10, 2013, 03:00:44 AM
I don't know where you got this idea. In the US When you trade something or barter it is your responsibility to document the value of the trade in US Dollars and pay taxes as if you sold it for that amount and you can be audited to make sure your methods are valid.
People should keep in mind there are potential tax consequences when using Bitcoin. However, there are at least four reasonable approaches, not just bartar, that one can take. And record keeping is an important duty also. But Bitcoin is sufficiently flexible for a creative tax planner to work wonders.
Of course, all of this is covered in A Lawyer's Take On Bitcoin And Taxes.
March 08, 2013, 03:20:15 PM
The problem is bitcoins isn't money, it's an item. It's a trade, not a sale. It's a tax nightmare because ok let's assume you sell a computer you paid $400 for, to someone for $600 in bitcoins at the current market value. Bitcoins aren't currency, so that is not taxable. There is no accounting or paperwork for bitcoins, so you can completely ignore that when tax season comes.
Let's assume the business goes to sell the bitcoins to recoup their $400 investment. They get $600 and technically make a 200 dollar profit, but again there is no legal framework showing that 200 dollar profit. If you hold the bitcoins from the sale and the bitcoin price drops so it is only $300, is that still a profit?
The problem is that bitcoins are not a real currency endorsed by the government.
Let's assume the business goes to sell the bitcoins to recoup their $400 investment. They get $600 and technically make a 200 dollar profit, but again there is no legal framework showing that 200 dollar profit. If you hold the bitcoins from the sale and the bitcoin price drops so it is only $300, is that still a profit?
The problem is that bitcoins are not a real currency endorsed by the government.
March 07, 2013, 06:13:48 AM
That's a very clever idea, I'd be worried about whether the folks at Amazon etc. might take exception to them doing that though.
March 07, 2013, 03:26:11 AM
Looks like someone is doing it https://bitspend.net/
They had so many orders their reserve of fiat ran out lol.
If you do this properly you need massive reserves of cash and an unlimited credit card to proxy purchase with.
March 04, 2013, 09:59:55 PM
Looks like someone is doing it https://bitspend.net/
February 18, 2013, 05:32:29 PM
Here, in Hungary, you would have and income tax and thats all, if you are operating an internet related bussines. Taxes go from 18-50% depending what you do. 50% being gambling and lottery
February 17, 2013, 07:56:56 PM
If you pay sales tax on the item I dont see why you should have to pay anymore tax on top.
February 16, 2013, 03:04:11 AM
with irreversible transactions I like the idea of the burden of trust being placed with customers rather than merchants and not the other way around. It makes more sense. It's in a businesses best interest to behave. It's not in a persons. It's easier to see from user reviews how a business behaves. A customer doesn't have reviews.
February 16, 2013, 02:57:04 AM
Most online retailers offers some sort of gift card that can be purchased online; it seems like if someone wants to purchase using bitcoin from Newegg (for example) it would be simpler to just buy a giftcard with bitcoins. Then you don't have any problems with using your business credit card to ship products all over the place.
But however you do it, the major hurdle is trust. Someone is paying you cash, and you are promising to have product shipped to them. They have little recourse if you just pocket the coins, or the retailer fouls up the order in some way. A gift card is cleaner, but there is still significant trust issues involved.
But however you do it, the major hurdle is trust. Someone is paying you cash, and you are promising to have product shipped to them. They have little recourse if you just pocket the coins, or the retailer fouls up the order in some way. A gift card is cleaner, but there is still significant trust issues involved.
February 15, 2013, 10:10:10 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Right now as it stands the buyer of something online is required to report that on their taxes.A merchant that sells items is normally the party that collects from the customer for sale taxes. If you have a sales tax exemption certificate filled with the merchant because you are a reseller then you are responsible for collecting the sales tax from your customers (where sales tax is applicable).
February 15, 2013, 09:32:05 PM
That's very helpful actually. And the business I had in mind isn't "letting anyone buy anything with bitcion"... the idea I had is actually low volume. There would be a maximum of 50 transactions per day and each transaction's maximum value would be 100 dollars about(and not all at one site but rather spread across the internet).
February 15, 2013, 09:19:45 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Nobody can provide you exact details because it all depends. There are 280+ countries on the planet and in places like the US the law depends on both state and local level plus if the sale will occur across state or country lines.
In generally it is the responsibility of the merchant to collect sales tax when they have an obligation (due to tax laws). In that instance the merchant would provide the supplier with a reseller cert so the the supplier would NOT charge sales tax. The merchant would then collect sales tax from the end user. However NewEgg likely isn't going to give you exempt status. They aren't a distributor and they don't want people reselling their goods.
So even though the item would go directly from newegg to the person who bought with bitcoins.... the company in the middle that accepts the bitcoins and buys the item with their money would be construed as a "reseller" ?
Yes it is called drop shipping. Who did NewEgg sell it to? You or the end consumer? Who did the end consumer buy it from? You or NewEgg?
Still you aren't going to do any real volume without the supplier's permission. Sure you can probably do a couple dozen orders as a hobby but you don't think your credit card being used to ship thousands of orders to hundreds of addresses all over the country/world is going to pop up on their fraud screen.
Your issues aren't legal they are business. The same issues all Bitcoin related enterprises deal with when connecting to the "traditional world". It is unlikely that NewEgg would partner with you. So you can do it behind their back and eventually they will shut you down.
February 15, 2013, 09:08:05 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Sorry that is INCORRECT....
Consider the simple example of a ticket sales company, are you suggesting that they NEVER have to pay tax on the profit?
You are acting as an Agency offering a service and as such ...... it's taxable
I'm not talking about tax from profit. If there are profits great. and pay taxes on them great. I'm talking about sales tax. If the person pays the company bitcoins and the company then buys the item and sends it to the original person... how is the sales tax problem solved? Right now as it stands the buyer of something online is required to report that on their taxes. So would the person who pays with the bitcoins still be required to report the purchase on their taxes or is this somehow now the responsibility of the company in the middle? Does the company now have to pay a sales tax on something they are just letting someone else buy with bitcoins? Does anyone know exactly how that company that allows you to buy pizza with bitcoin works?
February 15, 2013, 09:04:18 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Nobody can provide you exact details because it all depends. There are 280+ countries on the planet and in places like the US the law depends on both state and local level plus if the sale will occur across state or country lines.
In generally it is the responsibility of the merchant to collect sales tax when they have an obligation (due to tax laws). In that instance the merchant would provide the supplier with a reseller cert so the the supplier would NOT charge sales tax. The merchant would then collect sales tax from the end user. However NewEgg likely isn't going to give you exempt status. They aren't a distributor and they don't want people reselling their goods.
So even though the item would go directly from newegg to the person who bought with bitcoins.... the company in the middle that accepts the bitcoins and buys the item with their money would be construed as a "reseller" ?
February 15, 2013, 08:56:42 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Sorry that is INCORRECT....
Consider the simple example of a ticket sales company, are you suggesting that they NEVER have to pay tax on the profit?
You are acting as an Agency offering a service and as such ...... it's taxable
February 15, 2013, 08:53:44 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
Nobody can provide you exact details because it all depends. There are 280+ countries on the planet and in places like the US the law depends on both state and local level plus if the sale will occur across state or country lines.
In generally it is the responsibility of the merchant to collect sales tax when they have an obligation (due to tax laws). In that instance the merchant would provide the supplier with a reseller cert so the the supplier would NOT charge sales tax. The merchant would then collect sales tax from the end user. However NewEgg likely isn't going to give you exempt status. They aren't a distributor and they don't want people reselling their goods.
February 15, 2013, 08:48:52 PM
Since the company would not actually be selling anything but just be allowing someone to buy an item through a different kind of payment is the sales tax still the responsibility of the purchaser (the person who used the bitcoin in the first place) to report as it is now?
February 15, 2013, 08:42:49 PM
In this example.... newegg accepts different forms of payment. So what form of payment would this business use to buy the merchandise? Would it be a corporate or business credit card?
And when that company goes to pay their taxes...... They pay taxes on their profit right? The fee for the service they charge?
And when that company goes to pay their taxes...... They pay taxes on their profit right? The fee for the service they charge?
Right business only pay taxes on their profit. Other than sales tax
February 15, 2013, 08:42:00 PM
Say you want a business where you accept bitcoins... and the business itself buys some item and sends it to the person who bought with bitcoins. What legal hurdles are there?
It depends:
First: On the location of the registered business and the rules governing that location.
Second: On the terms and contracts of any other business doing business with your entity.
Third: The rules governing the location where you are TRANSACTING your business.
So If you are in:
1.Holland and buying drugs, it may be legal, but once you transact them to a 3rd party different rules will apply.
2.Japan Buying cartoon images illustrating sexual acts with a minor it's legal, but as soon as you move outside of Japan there is a significant risk of being labelled a paedophile and in the case of the Uk , if you get caught you have to sign on the Sex offenders register.
3. Crypto technology manufactured in China is legal to own, but in many cases NOT operate, shipping outside the country without the required licenses gets you a one way ticket to a holiday camp..... It used to get you a free bullet.
I'm not suggesting that you meet either of the above, but by giving a strong example case, it highlights the problems.
It is your responsibility to ensure your business meets the requirements.
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