Internet Marketing Tax Tips
One of the biggest and most potentially deadly myths about Online Marketing is that it is a tax free market. Individuals who enter it usually feel that just because they are generating an income and being paid through, for instance, PayPal, they don’t need to pay taxes on what they earn. It’s completely untrue! What’s more important is that if you don’t pay taxes on this money, you could end up in all sorts of trouble! You don’t have to freak out, though: Internet Marketing taxes don’t have to be stressful. Here are some tips and hints that will help you.
1. See the local Small Business organization. Just about every community has a Small Business Association (usually working through a community college) that employs specialists on both starting your business and making sure that all of the details (like taxes) are dealt with. The wonderful thing is that this source of information is almost always cost free.
2. Monitor everything. Say it once more: keep an eye on just about every last detail. Excel makes this easier than you think. Start a spreadsheet of each penny you earn through your Online Marketing efforts and another that documents every single penny you spend on your Web Marketing efforts. Make sure you keep each and every receipt and invoice for the money you spend.
3. In case you have sufficient funds, engage a professional accountant. In this way you do not have to worry about the numbers and taxes part of your online business. You tell them how much money you’ve generated, show them how much you’ve spent (you’ll need proof of these things) and they take care of the rest, particularly at tax time.
4. Pay towards the taxes you’ll owe throughout the year. 30% of every sale is the basic rule you’ll want to follow. This can be accomplished every three months or even every month by making Estimated Tax Payments to the IRS. The IRS is right now set up well enough that they can take estimated tax payments from you when you feel like making them. This can keep you from paying a gut wrenching amount at the end of the year (which, if you haven’t saved up for it, will be particularly stressful). What is much better is that if you have somehow overpaid through your estimated tax payments, you’re going to get a reimbursement just like you would if you were working for a traditional employer. Be sure to speak with somebody at the IRS to get this set up correctly.
5. Be familiar with every one of your allowed deductions. When you run your own business lots of things including your utility payments, etc are tax deductible (as is any money you spend on business equipment or supplies). Your accountant or an agent from the IRS will be able to help you work out which deductions you can claim at tax filing season.
It’s not all that difficult to become intimidated by the idea of having to pay taxes when you are an online marketer. The good news is that there are a number of 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 generate.