One of the worst misconceptions regarding working in Web Marketing is that it is a tax free industry. Individuals get into IM convinced that because they are generating an income online and being paid through, mostly, PayPal--they don't have to pay taxes on that money. This is absolutely untrue! More importantly, failing to pay taxes on this income can get you into all sorts of trouble! You don't have to freak out, though: Internet Marketing taxes don't really need to be stressful. Below are a few hints and tips that might help you.
1. Set up a visit with the local Small Business Association. Just about every community has some kind of small business "helper" organization (often run through a community college) that has trained experts available to help you both getting your business starting and ensuring all of your T's are crossed and your I's are dotted. Best of all, this resource is almost always zero cost!
2. Monitor every little thing. Let us repeat that because it is important: monitor every single detail. Excel makes this easy. Begin a spread sheet of every penny you make through your Internet Marketing efforts and another that documents each and every penny you spend on your Internet Marketing efforts. Don't forget to keep every single receipt and invoice for the money you spend.
3. If you're able to afford it, work with an accountant. This will likely allow you a bit of freedom in the tracking of all of your taxes and online business numbers. You tell them how much money you've made, show them how much you've expended (you'll need proof of these things) and they take care of the rest, especially at tax time.
4. Pay towards the taxes you'll owe throughout the year. 30% of every sale is the basic guideline you need to follow. This can be done every 3 months through Estimated Tax Payments with the IRS or you could even do this every month. The IRS now has the capability to receive estimated tax payments whenever you think or want to make them. By doing this you'll not have an eye popping number that you owe at the end of the year (which will be specifically stressful if you haven't saved up for it). What's great is that if you overpay through your estimated tax payments, you're going to get a refund like you would by paying taxes with a normal job. You'll want to talk to someone at the IRS so that you can get this set up correctly.
5. Find out about all your allowed write-offs. When you manage your own business from home, there are a lot of things, like the money you pay in for utility payments, that become tax deductible--just like paying for other business related supplies. Your accountant or someone from the IRS can help you figure out what all you can write off once it's time for you to pay taxes.
It's not all that difficult to become intimidated by the idea of paying taxes when you are an Internet Marketer. The great thing is that there are quite a few resources that can help you ensure that you don't get in trouble with the IRS and that you could keep a healthy portion of the earnings that you make.