Tax Considerations When Starting a P2P Service
Technological improvements have led to the rising of new business models. One of these is the P2P or peer to peer business model where two parties that are strangers come together to share resources using a third party platform. They need to pay the third party platform for the use of their connecting service and then proceed with their sharing of resources. Examples of such P2P business include car sharing sites such as Uber, Lyft, and BlaBlaCar. Such platforms are also available for the short term rental market. However, the new business model brings with it the problems of taxation.
For instance, when a person uses a P2P platform to connect with another to share a car ride, they need to pay the platform for the service. However, some traditional transportation corporations have tried to stop these services since they fear a loss of revenue. As such companies such as Lyft now claim that they do not charge for their services and instead depend on donations.
Whether they charge a fixed fee or ask for donations, taxing such revenues is problematic for revenue officials. Also, the service platforms also risk violating some laws if they do not pay the necessary taxes due.
If you are starting a new business venture using the latest technology and therefore a new business model, you are likely to find that existing regulations and tax rules do not fit the model with ease. In such cases, you should consult with an experienced tax lawyer or tax attorney who can analyze your business model and help you understand your tax obligations.
Moreover, an experienced tax attorney will be able to assess your business model from a tax angle and suggest ways in which it can be altered to reduce your tax burden.
A Win Win
A successful entrepreneur needs many elements to succeed. They need to have a viable new business model that helps provide a service that people need at an affordable price. Additionally, the entrepreneur also needs to provide a high quality service while retaining a high profit margin. This is what can help them to expand their business by investing in new areas. One way of keeping your profit margins high is by cutting costs. By consulting with tax lawyers who are familiar with the nuances of the tax laws as applicable to businesses, you will be able to ensure that you pay lower taxes on your profits and claim all the exemptions available. This will help you generate sufficient profits without having to face the tax authorities over unpaid taxes.
The US federal government and the various states have provided many tax exemptions to encourage businesses to start up and grow. Although in contemporary America, and certainly in some states such as California, Illinois, and New York, starting and running a business is financially formidable. By consulting with a tax lawyer you will be able to structure your business in such a manner that you can benefit from these exemptions that have been set up to encourage entrepreneurship. A lawyer of this kind and caliber will help you convince the tax authorities that the taxes your business pays are the right amount.