Internet Marketing Tax Tips and Tricks
One of the worst myths regarding working in Web Marketing is that it is a tax free industry. People who enter it seem to think that just because they are making money and being paid through, for instance, PayPal, they do not have to pay taxes on what they generate. It’s completely false! More importantly, failure to pay taxes on this income could land you in tons of trouble. Don’t fret, however: doing your taxes as an online marketer doesn’t have to be tough. Here are some tips to aid you.
1. Set up a meeting with the 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 many 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. The best thing is that this source of information is almost always cost free.
2. Document every single little thing. Let’s repeat that as it’s important: keep track of each and every detail. This is pretty simple to do with Excel. You just need one spreadsheet that will keep track of all of the money you generate (down to the penny) and another that will keep track of all of the money you expend (yet again, down to the penny). Keep all the statements and receipts that document these transactions.
3. If you have enough funds, hire a professional accountant. This would prevent you from having to worry about the numbers and the taxes for your small business. You tell your accountant what you’ve generated and expended (be sure to have documentation for proof) and they take over from there.
4. Pay towards the taxes you’ll owe throughout the year. A fundamental principle here is to pay in 30% of every sale. You can do this quarterly through Estimated Tax Payments with the IRS or you could even do this month to month. The IRS is now set up well enough that they can get estimated tax payments from you when you feel like making them. This is going to save you from paying out a genuinely distressing amount of money all at once which, if you haven’t been saving up for it, can be very stressful. Even better: if you have overpaid in your estimated tax payments, you will get a refund — just like you would if you were working for a business! You’ll want to consult with someone at the IRS so that you can get this set up the right way.
5. Be familiar with all your allowed deductions. When you manage your own business at home, there are a number of things, such as the money you pay in for utility payments, that become tax deductible–just like paying for other business related supplies. Your accountant or someone from the IRS can help you figure out what all you can write off when it is time for you to pay taxes.
It’s not all that difficult to become intimidated by the idea of paying out taxes when you are a web marketer. The good news is that there are plenty of resources to help you make sure you keep to the law and keep a healthy share of the profit you make!