Running an Online Business.

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

Running an Online Business.

 Part 3

Welcome to Part 3 of Running an Online Business.

Today I am going to talk about the dreaded “T” word -TAX

The scary but simple truth is that the majority of Internet marketers who are running an online business part-time never give a moment’s thought to the fact that they should be declaring their online earnings and paying tax on them.

This is a very big mistake to make, especially in jurisdictions like Australia, the USA, UK and where the taxation authorities have almost unlimited powers that they can invoke against anybody who they suspect of tax evasion.

Perhaps you have never thought that forgetting to pay a little bit of income tax on your on-the-side earnings is tax evasion, but that is exactly what it is, and the longer you allow the problem to run, the bigger the problem is going to get.

Running an Online Business will be discovered by the Tax Man.

Perhaps you believe that running an online business is never going to be discovered anyway, but if that is your belief, then I am sorry to inform you that you are sadly mistaken.

If, for example, you make sales as an affiliate for products that are promoted on a network site like Clickbank, and you are a US citizen, then there are two ways that the IRS can discover your part-time income very easily.

First, Clickbank can be ordered by the IRS to produce all of their records at any time, and those records would show that they have been issuing checks to you. Those checks would have been presented by you to your own bank, which is the second place that the IRS can check.

In a similar manner, if you are receiving payments through PayPal, they too would have to produce all of their records to the IRS whenever they were told to do so, and the exact same situation would apply.

However you receive income from running an online business…

…it is going to be extremely easy for the tax authorities to discover it if they ever decide to look into your financial affairs, and you would have little or no recourse should that happen.

Keep in mind that tax laws differ from country to country so you need to know exactly what the rules are where you live.

For example, citizens of some countries have to pay income tax on their earnings worldwide (Australia,in the USA and UK for example) whereas in other jurisdictions, income tax is only paid on income that is either earned in that country, or actually brought in from overseas.

No matter where you live, the bottom line is, that tax will almost certainly have to be paid on any earnings that you generate online at some point, no matter how small or seemingly inconsequential the sums involved are.

As we discussed in Part 2, it is important that you find an accountant that is well versed in online business laws,  because your home-based business may have more tax advantages than you aware of.

Whether you have an accountant or not, it is a good idea that you do your research, keep up on the current laws and keep track of your expenses and deductions yourself, to make tax time go as smoothly as possible.

Here is an article that may help.

Look for my next article soon!  We will be talking more about the legal side of things.

If you have found this article on running an online business helpful, please share and leave a comment.

photo credit: Dave Dugdale via photo pin cc