An E-Commerce Journal Part 2
AdvertisingYou may remember that in the business plan, we set aside some money for advertising. That money was spent at two art magazines, The Dallas-Houston Design Guide and Art Business News. The Design Guide is a yearly publication, while Art Business News is a monthly. We bought four months to get us through Christmas.
In terms of banner advertising on the Internet, we purchased banner ads on Lycos. We've been in contact with Yahoo and IWon, but apparently we are not large enough to be worth their time. I can't even get a return phone call.
On Lycos, we purchased the keywords artwork, etching, watercolor, and decor. Every time a person uses one of those keywords, the StreetArtist.com banner pops up. In addition, we also bought what is known as the "Start here" text. That means we made sure our link comes up first in any search using those keywords.
Except for the Design Guide, all advertising goes live September 1st, 2000.
We will do more advertising because the budget allows it. I intend to spend every penny of the loan. I have to pay it back anyway, so I might as well spend it.
Maybe you'd think it would be better if I end this part of the journal on a more interesting note. Well, taxes are pretty much the most interesting part of the business so far. The reason is, no one could really say for sure how I am suppose to pay taxes on the items I sell. Even my accountant wasn't sure how it was done. I went through four different people before I got to the highest level of management at the state tax bureau. There, I received a definitive answer.
If you are starting an Internet business, I suggest you get a copy of the Internet Tax Freedom Act created by House Policy Chairman Christopher Cox and U. S. Senator Ron Wyden. Everyone here in Louisiana was very fair about what taxes I had to pay. I never ran into any trouble. You might, so know that Tax Freedom Act.
When I told a friend that I was starting an Internet business, he said that was great because I didn't have to pay any taxes.
Wrong! Wrong, wrong, wrong.
Do not simply start up an e-commerce business and think that you will pay nothing. You will. First off, you are conducting business, so you will need a license. That costs. You may have to pay zoning. That costs.
Here in Louisiana, the rules are pretty straightforward. Louisiana tax is nine percent on all goods purchased. I know that seems high, but our other taxes are way low. I like the system very much actually. That 9% gets split up between the state and the parish where the goods were purchased. The rules are as follows:
- Any paintings purchased within the border of Louisiana will be charged a 9% tax.
- That tax will be split and paid to the government of Louisiana and the parish where the good were purchased. That means if a painting is purchased in the next parish over from mine, I need to get a new parish tax ID for that parish so I can pay then their tax.
- For example, I live in Tangipahoa Parish. If someone in Orleans parish buys art from me, I will need to collect the tax and then pay both the state and Orleans parish. That means I would need a tax ID in Orleans parish. Thus - every time a purchase is made from a Louisiana parish, I need to get a tax ID from that parish and pay taxes. There are 64 parishes in all. I may very well have to get 64 different parish ID numbers. It's difficult at the moment, but sooner or later someone is going to create a state/parish ID system, where one fee buys in all 64 parishes. Heck, maybe I'll lobby for it.
- Purchases from out of state pay no tax under the interstate commerce laws.
- I must submit all transactions to the state whether I pay taxes or not.
- I must submit all transactions monthly for one year. After one year, I can apply to process all transaction quarterly.
I have a very good accountant who will help us get everything done on time and in the proper order. At least I hope he will. If we don't, the fines are heavy. That was made very, very clear when we received our state tax ID.
Thanks for reading--we hope to see you next week!