One of the most detrimental myths about working in Online Marketing is that it is a tax free industry. Individuals go into IM convinced that because they are generating an income online and being paid through, mostly, PayPal--they don't have to pay taxes on that money. This is not true! What's more important is that if you fail to pay taxes on this money, you can actually wind up in all kinds of trouble! Don't fret, however: doing your taxes as an Internet Marketer doesn't need to be difficult. Here are some ideas to aid you.
1. Secure an appointment at your local Small Business Association. All communities have some type of small business helping association or organization (usually run via a local community or city college) that has a lot of trained experts on hand to help you both set up your business and ensure that all of your tax issues are carefully and correctly taken care of. What's notably wonderful is that this resource is just about always free of charge.
2. Document just about every little thing. This is really worth repeating: keep track of everything. This is certainly simple enough to do via Excel. You just need one spreadsheet that will keep track of all of the money you make (down to the penny) and another that will keep track of all of the money you expend (once again, down to the penny). You should keep receipts and invoices for all of the money that you pay out.3. If you have the money for it, retain the services of an accountant. This will likely allow you some freedom in the tracking of all of your taxes and business numbers. You tell them the amount of money you've made, show them how much you've expended (you'll need proof of these things) and they take care of the rest, particularly at tax season.
4. Pay in toward the taxes you will be owing at the end of the year. A good rule is to pay 30% of each sale. This can be done every 3 months through Estimated Tax Payments with the IRS or you could even do this monthly. The IRS is now set up well enough that they can receive estimated tax payments from you whenever you feel like making them. This is going to save you from paying out a really distressing amount of money all at once which, if you haven't been saving up for it, can be incredibly stressful. What's great is that if you overpay through your estimated tax payments, you'll get a refund like you would by paying taxes with a regular job. Be sure to consult with someone at the IRS to make sure you get set up correctly.
5. Learn about each of your allowed tax deductions. When you operate your own business in your own home, there are many things, such as the money you pay in for utility payments, that become tax deductible--just like paying for other business related supplies. An accountant or an IRS rep should be able to help you determine what all you can deduct come tax season. Becoming intimidated by the tax process when you are an Internet Marketer is quite natural. The great thing is that there are quite a few resources that can help you ensure that you don't get in trouble with the IRS and that you can still keep a healthy portion of the earnings that you pull in.
1. Secure an appointment at your local Small Business Association. All communities have some type of small business helping association or organization (usually run via a local community or city college) that has a lot of trained experts on hand to help you both set up your business and ensure that all of your tax issues are carefully and correctly taken care of. What's notably wonderful is that this resource is just about always free of charge.
2. Document just about every little thing. This is really worth repeating: keep track of everything. This is certainly simple enough to do via Excel. You just need one spreadsheet that will keep track of all of the money you make (down to the penny) and another that will keep track of all of the money you expend (once again, down to the penny). You should keep receipts and invoices for all of the money that you pay out.3. If you have the money for it, retain the services of an accountant. This will likely allow you some freedom in the tracking of all of your taxes and business numbers. You tell them the amount of money you've made, show them how much you've expended (you'll need proof of these things) and they take care of the rest, particularly at tax season.
4. Pay in toward the taxes you will be owing at the end of the year. A good rule is to pay 30% of each sale. This can be done every 3 months through Estimated Tax Payments with the IRS or you could even do this monthly. The IRS is now set up well enough that they can receive estimated tax payments from you whenever you feel like making them. This is going to save you from paying out a really distressing amount of money all at once which, if you haven't been saving up for it, can be incredibly stressful. What's great is that if you overpay through your estimated tax payments, you'll get a refund like you would by paying taxes with a regular job. Be sure to consult with someone at the IRS to make sure you get set up correctly.
5. Learn about each of your allowed tax deductions. When you operate your own business in your own home, there are many things, such as the money you pay in for utility payments, that become tax deductible--just like paying for other business related supplies. An accountant or an IRS rep should be able to help you determine what all you can deduct come tax season. Becoming intimidated by the tax process when you are an Internet Marketer is quite natural. The great thing is that there are quite a few resources that can help you ensure that you don't get in trouble with the IRS and that you can still keep a healthy portion of the earnings that you pull in.
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