Online Marketing Tax Hints

James Hicks Mar 22, 2012 · 2 min read

Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.

One of the biggest and most potentially dangerous myths about Internet Marketing is that it is a tax free market. People go into IM believing that because they are earning money online and being paid through, mostly, PayPal–they need not pay taxes on that money. It’s completely untrue! Most importantly, failing to pay taxes on this income could possibly land you in lots of trouble. Fear not, though: doing your taxes as an Internet Marketer doesn’t have to be difficult. Here are some ideas to help you out.

1. Schedule an appointment with your local Small Business organization. Each community has a Small Business Association (typically working through a community college) that employs specialists on both starting your business and making sure that all of the details (like taxes) are handled. Additionally, this resource is practically always zero cost!

2. Keep track of every single thing. This is worth echoing: keep track of every single thing. This is simple to do through Excel. Put together a spreadsheet and keep track of every last cent you earn with your Internet Marketing business as well as one that tracks each cent you spend on your IM efforts. Keep the invoices and receipts that document these purchases.

3. In case you have enough money, engage a professional accountant. This would prevent you from having to worry about the numbers and the taxes for your business. You tell your accountant what you’ve made and put in (make sure you have documentation for proof) and they take over from there.

4. Pay in toward the taxes you will be owing at the end of the year. A fundamental rule here is to pay in 30% of every sale. This can be done every three months or even every month by making Estimated Tax Payments to the IRS. The IRS is established now to get estimated tax payments whenever you want or think you need to be making them. This will save you from having to pay a genuinely distressing amount of money all at once which, if you haven’t been saving up for it, can be extremely stressful. Better yet: 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! Be sure to talk to someone at the IRS to get this set up the right way.

5. Find out which write-offs you are allowed to take. When you manage your own business in your own home, there are a lot 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 an agent from the IRS should be able to help you figure out which deductions you can claim at tax season.

It isn’t difficult to get intimidated by the idea of paying taxes as an Internet Marketer. The great thing is that there are plenty of resources to help you make sure you follow the law and keep a healthy share of the profit you make!