Taxes on business that accept bitcoins

[Kiki112]

I was wondering, if you open a business that accepts bitcoins, how do you tax it?

Do you have to tax i and can you be penalized for not taxing?


Does the goverment rely on our honesty and how much income from bitcoin exchanges we're going to report?

[blacksails]

They'll have to rely on your honesty unless they have a way to link you to all your transactions.
If they find out that you have been withholding money you could get penalized.

[Kiki112]

They'll have to rely on your honesty unless they have a way to link you to all your transactions.
If they find out that you have been withholding money you could get penalized.

interesting!

well, I would still pay taxes fairly, I was just asking for information

altough, how would they even find out I am witholding money?

[blacksails]

They'll have to rely on your honesty unless they have a way to link you to all your transactions.
If they find out that you have been withholding money you could get penalized.

interesting!

well, I would still pay taxes fairly, I was just asking for information

altough, how would they even find out I am witholding money?

If they manage to link your withheld bitcoins to you, or someone tells the tax agencies about what you are doing.

[DooMAD]

Also depends on your country and it's own domestic tax policies.  Here in the UK, for example, HMRC have decided that Bitcoin isn't subject to VAT, but is subject to corporation and income tax.  Everywhere will have different guidelines, so you'll be better off doing your own research, as people here might give you the wrong advice for your particular region.

[Kiki112]

Also depends on your country and it's own domestic tax policies.  Here in the UK, for example, HMRC have decided that Bitcoin isn't subject to VAT, but is subject to corporation and income tax.  Everywhere will have different guidelines, so you'll be better off doing your own research, as people here might give you the wrong advice for your particular region.

okay, thanks

[zolace]

No taxing body accepts Bitcoin as payment. Bitcoin sales must first be converted into U.S. dollars to calculate the amount due and make the payment. But, in many cases, this could mean calculating amounts in fractions of Bitcoin. For example, let’s say one Bitcoin is equal to $100 USD. A $100 transaction subject to 6 percent state sales tax leaves the merchant holding .06 Bitcoin. In order to pay the tax properly, the merchant must first convert that partial Bitcoin into U.S. dollars. In order to meet the tax obligation, the merchant must track each Bitcoin transaction and keep accurate record of how much is owed in USD (not Bitcoin) to meet their obligation when it’s time to remit sales tax.

source :http://www.forbes.com/sites/groupthink/2014/02/24/tax-trouble-may-burst-the-bitcoin-bubble-for-merchants/