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The misconception that Online Marketing is a tax free industry is just about the worst and most dangerous myth in the market. Folks go into IM convinced that because they are making money online and being paid through, mostly, PayPal--they don't have to pay taxes on that money. It is not true! What's more important is that if you do not pay taxes on this money, you may wind up in all sorts of trouble! You don't have to worry, though: Internet Marketing taxes don't need to be stressful. Here's a few things which could help you.
1. Obtain an appointment at your local Small Business Association. All communities have some kind of small business helping association or organization (usually run via a local community or city college) that has plenty of trained experts on hand to help you both set up your business and make sure that all of your tax issues are carefully and correctly taken care of. The great thing is that this powerful resource is almost always without charge.
2. Monitor everything. Say it once again: keep an eye on each and every last detail. This is easy enough to do with Excel. Start a spreadsheet of each penny you generate through your Internet Marketing efforts and another that documents each and every penny you spend on your Web Marketing efforts. Be sure to keep each receipt and invoice for the money you shell out.
3. If you could afford it, work with an accountant. By doing this you would not have to worry about the numbers and taxes part of your online business. You tell your accountant what you've earned and expended (make sure you have documentation for proof) and they take over from there.
4. Put money toward the taxes that you could owe at the end of the year. 30% of every single sale is the fundamental rule you should follow. This can be accomplished every 3 months through Estimated Tax Payments with the IRS or you could even do this month to month. The IRS is currently set up well enough that they can take estimated tax payments from you whenever you feel like making them. We know that you are enjoying all that is offered about
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All you need to do is follow along because we have this plus much more in store. As you go through this, some things will standout more than others, but do not throw the baby out with the bathwater, either. That can sometimes be a mistake because on closer observation you will often change your mind. It is hardly ever a good idea to maintain a closed mind about anything, and that has served us very well.
But there is much more to come, today, and you will see that it will come together quite nicely.
So, if you think that you will not be able to remember it all, you can and we have confidence that it will gel with some helpful tips to follow. In this way you will not have an eye popping number that you owe at the end of the year (which will be specifically stressful if you haven't saved up for it). What is better is that if you have somehow overpaid through your estimated tax payments, you'll get a reimbursement just like you would if you were working for a traditional company. Make sure you consult with someone at the IRS to make sure you get set up properly.
5. Find out which write-offs you are allowed to take. When you operate your own business a lot of things like your utility payments, etc are tax deductible (as is any money you spend on business equipment or supplies). Your accountant or a rep from the IRS can help you work out which deductions you can claim at tax season.
Becoming intimidated by the tax process when you are an online marketer is quite normal. The good thing is that there are a lot of resources to help you make sure you stick to the law and keep a healthy share of the profit you make!
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Then it is up to you as to move forward with a linear consideration to the topic, or in any other direction.
Additional Resources:
Online Marketing Tax Hints