Internet Marketing Tax Tips
One of the worst myths about working in Web Marketing is that it is a tax free industry. Individuals go into IM convinced that because they are making money online and being paid through, mostly, PayPal–they need not pay taxes on that money. It’s untrue! More importantly, failing to pay taxes on this income could get you into all kinds of trouble! Do not freak out, though: it isn’t really hard to do taxes when you are a web marketer. Here are some ideas to aid you.
1. Make an appointment with the local Small Business organization. All communities have some form of small business helping association or organization (generally 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 ensure that all of your tax issues are carefully and properly taken care of. What’s particularly wonderful is that this source of information is just about always without charge.
2. Keep track of everything. Let’s say it once more: keep an eye on just about every last detail. This is pretty simple to do with Excel. Put together a spreadsheet and record every last cent you make with your Internet Marketing business and also one that tracks each cent you spend on your IM efforts. Don’t forget to keep each and every receipt and invoice for the money you shell out.
3. If you can afford it, work with an accountant. This will likely prevent you from having to worry about the numbers and the taxes for your online business. You tell your accountant what you’ve earned and paid out (make sure you can prove this with official documentation) and they take care of everything else–especially during tax season.
4. Pay in toward the taxes you will be owing at the end of the year. A good guideline is to pay 30% of each sale. This can be accomplished every quarter or even on a monthly basis by making Estimated Tax Payments to the IRS. The IRS is established now to receive estimated tax payments without notice or think you need to be making them. This is going to save you from coughing up a really distressing amount of money all at once which, if you haven’t been saving up for it, can be extremely stressful. What is even better is that if you have somehow overpaid through your estimated tax payments, you’ll receive a refund just like you would if you were working for a traditional employer. Be sure you consult with someone at the IRS to get this set up correctly.
5. Be familiar with each of your allowed tax deductions. When you manage your own business from home, there are a number of things, including 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 deduct when it’s time to pay taxes.
It is not difficult to get intimidated by the idea of paying taxes as a web marketer. The good thing is that there are a number of resources that will help you ensure that you don’t get in trouble with the IRS and that you can continue to keep a healthy portion of the profits that you pull in.