Internet Marketing Tax Hints and Tricks
One of the biggest and most potentially dangerous misconceptions about Web Marketing is that it is a tax free industry. Men and women enter IM convinced that because they are generating an income online and being paid through, mostly, PayPal–they need not pay taxes on that money. This is simply not true! More to the point, failure to pay taxes on this income could very well land you in lots of trouble. There’s no need to freak out, though: Online Marketing taxes don’t need to be stressful. Here are some things which will help you.
1. Secure an appointment at your local Small Business Association. Every community has some form of small business “helper” organization (usually run through a community college) which has trained experts available to help you both getting your business starting and ensuring that all of your T’s are crossed and your I’s are dotted. What’s particularly great is that this resource is just about always without charge.
2. Record each little thing. Say it again: keep an eye on every single last detail. Excel makes this simple enough. You just need one spreadsheet that will keep track of all of the money you earn (down to the penny) and another that will keep track of all of the money you spend (once again, down to the penny). Keep all the statements and receipts that document these purchases.
3. If you can afford it, work with an accountant. This will allow you a little freedom in the tracking of all of your taxes and business numbers. You tell your accountant what you’ve brought in and paid out (you should can prove this with official documents) and they take care of everything else–especially during tax season.
4. Put money towards the taxes that you could owe at the end of the year. A good guideline is to pay 30% of every sale. You can do this through quarterly Estimated Tax Payments or even every month with the IRS. The IRS is right now set up well enough that they can receive estimated tax payments from you when you feel like making them. This can 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, will be particularly stressful). What’s better is that if you overpay through your estimated tax payments, you’re going to get a refund like you would by paying taxes with a normal job. Make sure to talk with someone at the IRS to make sure you get set up properly.
5. Know about your allowed tax deductions. When you operate your own business quite a lot of things such as your utility payments, etc are tax deductible (as is any money you spend on business equipment or supplies). Your accountant or someone from the IRS can help you find out what all you can write off once it’s time for you to pay taxes.
It is not all that difficult to become intimidated by the idea of paying out taxes when you are an Internet Marketer. The great thing is that there are plenty of resources to help you make sure you stick to the law and keep a healthy share of the profit you make!