Internet Marketing Tax Hints
The misconception that Web Marketing is a tax free industry is basically the worst and most dangerous misconception in the market. Individuals get into it convinced that because the money they earn comes to them largely through online sources like PayPal that they don’t need to pay taxes on the things that they’ve made. This is incorrect! More importantly, failing to pay taxes on this income could get you into all sorts of trouble! You don’t need to panic, though: Web Marketing taxes don’t need to be stressful. Here are some hints and tips that might help you.
1. Make an appointment with a local Small Business organization. Just about every community has a Small Business Association (ordinarily working through a community college) that has experts on both starting your business and making sure that all of the details (like taxes) are taken care of. The wonderful thing is that this resource is almost always free of charge.
2. Monitor everything. Let me repeat that as it’s important: keep an eye on each detail. This can be done simply enough using Excel. You just need one spreadsheet that will monitor all of the money you earn (down to the penny) and another that will keep track of all of the money you shell out (once again, down to the penny). Make sure you keep each receipt and invoice for the money you pay out.
3. If you have the money to do so, work with an accountant. By doing this you would not have to worry about the numbers and taxes part of your small business. You tell your accountant what you’ve made and paid out (make sure you can prove this with official documents) and they take care of everything else–especially during tax season.
4. Put money towards the taxes you could possibly owe at the end of the year. 30% of each sale is the basic rule of thumb you need to follow. This can be accomplished quarterly 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 get estimated tax payments from you whenever you feel like making them. This can save you from having to pay a genuinely distressing amount of money all at once which, if you haven’t been saving up for it, can be very stressful. What’s even better is that if you overpay through your estimated tax payments, you’ll receive a refund exactly like you would by paying taxes with a normal job. Be sure to talk with someone at the IRS to make sure you get set up properly.
5. Learn about each of your allowed write-offs. 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 someone from the IRS can help you find out what all you can take when it’s time for you to pay taxes.
Becoming intimidated by the tax process when you are an online marketer is quite common. Fortunately, there are all kinds of resources available to help you observe the law and still keep yourself from losing your shirt to the IRS!