The belief that Online Marketing is a tax free industry is just about the worst and most dangerous myth in the market. People who get into it appear to believe that just because they are earning money and being paid through, for instance, PayPal, they don’t need to pay taxes on what they make. This is absolutely false! Most importantly, failing to pay taxes on this income could easily get you into all kinds of trouble! There’s no need to worry, though: Online Marketing taxes don’t need to be stressful. Below are a few things which could help you.
1. Obtain an appointment at your local Small Business Association. Every community has a Small Business Association (usually working through a community college) that employs professionals on both starting your business and making sure that all of the details (like taxes) are handled. What’s especially great is that this powerful resource is just about always cost free.
2. Monitor every single thing. This is well worth reiterating: record every single thing. Excel makes this easier than you think. Create a spreadsheet and keep track of every last cent you make with your Internet Marketing business as well as one that tracks each and every cent you spend on your IM efforts. Be sure to keep receipts and invoices for all of the money you spend.
3. If you’ve got enough money, engage a professional accountant. This would stop you from having to worry about the numbers and the taxes for your business. You tell them the amount of money you’ve generated, show them how much you’ve expended (you’ll need proof of these things) and they take care of the rest, especially at tax season.
4. Pay in toward the taxes you’ll be owing at the end of the year. A good rule of thumb is to pay 30% of each and every sale. You can do this every 3 months or even on a monthly basis by making Estimated Tax Payments to the IRS. The IRS is currently set up well enough that they can take estimated tax payments from you whenever you feel like making them. This is going to save you from paying out a really distressing amount of money all at once which, if you haven’t been saving up for it, can be extremely stressful. Even better: if you have overpaid in your estimated tax payments, you’re going to get a refund — just like you would if you were working for an employer! Make sure you consult with someone at the IRS to make sure you get set up the right way.
5. Find out about all your allowed write-offs. If you wish to run your own business in your own home, many things like the payments you make for your utilities become tax deductible just like the money you’re going to pay for supplies or business equipment. An accountant or an IRS agent can help you determine what all you can deduct come tax filing season.
It isn’t 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 still keep a healthy portion of the earnings that you pull in.