Tax Tips for Web Marketers
The belief that Internet Marketing is a tax free industry is just about the worst and most dangerous misconception in the market. Folks go into it convinced that as the money they earn comes to them mainly through online sources like PayPal that they do not have to pay taxes on the things that they’ve generated. This is completely false! Most importantly, failure to pay taxes on this income could very well land you in tons of trouble. There’s no need to freak out, though: Web Marketing taxes don’t need to be stressful. Below are great tips to help you out.
1. Schedule an appointment with your local Small Business organization. Each and every community has some type of small business “helper” organization (generally run through a community college) which has trained specialists available to help you both getting your business starting and ensuring all of your T’s are crossed and your I’s are dotted. The wonderful thing is that this powerful resource is almost always cost free.
2. Monitor everything. Let’s repeat that because it is important: keep track of every single detail. This is certainly easy enough to do through Excel. Create a worksheet of every penny you generate through your Web Marketing efforts and another that documents each penny you spend on your Online Marketing efforts. Keep all of the statements and receipts that document these transactions.
3. If you’re able to afford it, work with an accountant. This will prevent you from having to worry about the numbers and the taxes for your online business. You tell them how much money you’ve earned, show them how much you’ve invested (you’ll need proof of these things) and they take care of the rest, especially at tax season.
4. Put money towards the taxes you could possibly owe at the end of the year. A good principle is to pay 30% of each sale. This can be accomplished every three months or even on a monthly basis by making Estimated Tax Payments to the IRS. The IRS currently has the capability to receive estimated tax payments whenever you think or want to make them. In this way you will not have an eye popping number that you owe at the end of the year (which will be particularly stressful if you haven’t saved up for it). What is even better is that if you have somehow overpaid through your estimated tax payments, you’ll get a reimbursement just like you would if you were working for a traditional employer. It’s vital to speak with someone at the IRS so that you can get this set up properly.
5. Be familiar with each of your allowed write-offs. When you operate your own business a lot of things like 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 write off when it is time to pay taxes.
Becoming intimidated by the tax process when you are a web marketer is quite common. Luckily, there are a lot of resources available to help you observe the law and still keep yourself from losing your shirt to the IRS!