If you are making money online through Internet marketing, then you should be aware that all of the money you make is taxable by the government. You may believe that it isn’t since it comes to you in little amounts here and there all from online sources, but that is untrue.
Not reporting your online earnings to the government can get you into a lot of trouble so it’s vital to honestly report all of your income. Here are some tips for handling income taxes for Internet marketer and people who make money online:
1. Be sure to record everything – It’s necessary to write down everything you spend and receive when making money online. Be sure to keep a spreadsheet using a program like Excel to show all of your incoming income, as well as listing everything that you spend money on regarding your business. Keep all invoices and documents that show your receipts for these transactions.
2. Pay your taxes quarterly – Arrange to pay your income taxes quarterly to save yourself a big bill at the end of the tax year. It’s possible to set up a way to make estimated tax payments every quarter to the government. A rough guess is to set aside about 30 percent of each sale towards your tax bill. If it’s too much, you’ll get a refund, which is better than owing taxes.
3. Find out what is allowed as deductions – If you run your Internet marketing business from your house, find out what can be deducted such as part of your utilities, home taxes, insurance, etc. Plus, you can deduct things like business expenses like supplies. Talk to an accountant to get all the details or call the Internal Revenue Service for advice or look online for topics such as medical expenses, etc. when it comes to making money online.
4. Hire an accountant – If you can afford the expense, it’s a good idea to hire the services of an accountant to help you figure out your taxes if you make money online. They are experienced and know all the current rules and regulations that can help you to save money on your business taxes. Plus, you can likely deduct the cost of an accountant on your taxes as well to save money.
5. Talk to the Small Business Association – You can also get tax advice from the local Small Business Association or perhaps a business club of some sort in your area. They are set up to help people like Internet marketers and people who make their money online.
By following the above advice you will ensure that you will be following the legal rules for paying taxes if you make money online through Internet marketing or other online business. Figuring out how to handle your income taxes if you make a living online doesn’t have to be difficult if you follow all the appropriate rules and regulations and pay your taxes honestly and promply.