Internet Marketing Tax Hints and Tricks
One of the worst fallacies concerning working in Web Marketing is that it is a tax free industry. Individuals get into it convinced that as the money they earn comes to them mainly through online sources like PayPal that they do not have to pay taxes on the things that they’ve generated. This is absolutely false! Most importantly, failing to pay taxes on this income could get you into a lot of trouble! You don’t have to panic, though: Web Marketing taxes don’t have to be stressful. Here are some tips to aid you.
1. Secure an appointment at your local Small Business Association. Every community has a Small Business Association (typically working through a community college) that has experts on both starting your business and making sure that all of the details (like taxes) are handled. The best thing is that this resource is almost always free of charge.
2. Record every single little thing. Let’s say it again: monitor each and every last detail. Excel makes this simple enough. You only need one spreadsheet that will record all of the money you generate (down to the penny) and another that will keep track of all of the money you spend (yet again, down to the penny). Keep all of the statements and receipts that document these transactions.
3. If you have money to afford it, retain the services of an accountant. This will allow you a bit of freedom in the tracking of all of your taxes and online business numbers. You tell your accountant what you’ve made and paid out (make sure you can prove this with official documentation) and they take care of everything else–especially during tax season.
4. Pay in toward the taxes you will end up owing at the end of the year. 30% of each sale is the basic rule you need to follow. This can be accomplished every quarter or even each month by making Estimated Tax Payments to the IRS. The IRS today has the ability to collect estimated tax payments if you think or want to make them. This will keep you from having to pay a gut wrenching amount at the end of the year (which, if you haven’t saved up for it, can be particularly stressful). What is much better is that if you have somehow overpaid through your estimated tax payments, you’ll get a repayment just like you would if you were working for a traditional employer. Make sure to talk with someone at the IRS to make sure you get set up the right way.
5. Be familiar with all your allowed tax deductions. When you run your own business from home, there are a lot of things, like the money you pay in for utility payments, that become tax deductible–just like paying for other business related supplies. Your accountant or someone from the IRS can help you determine what all you can write off once it’s time to pay taxes.
It isn’t all that difficult to become intimidated by the idea of having to pay taxes when you are an Internet Marketer. The good news is that there are many resources to help you make sure you keep to the law and keep a healthy share of the profit you make!