When your Internet Marketing efforts get you money, that money is recognized as income. That income must be reported to the INTERNAL REVENUE SERVICE and you have to pay taxes on it. Sadly, earning cash online is not tax-free. Don’t believe any person who attempts to tell you anything that visit website is different. You will not want to get into trouble with the Internal Revenue Service do you? There are not a lot of things that are worse than getting audited! Obviously, if you haven’t ever had to take care of your own taxes previously, finding out how to keep track of your income and expenses and the sum that you owe can be really difficult. Here are a few ideas to aid you.
You need to make sure that you keep very careful files of the amount of money you make. The documents need to have lots of details in them. Record each and every payment that you get, whom paid it to you and what exactly the payment is for. The date of the payment should be documented too. These records can be kept in a home accounting program like QuickBooks or feel free to use a system that you set up yourself. Some people do just fine with a basic Excel spreadsheet. Do not just throw out these kind of records after you’ve submitted your taxes. It is essential that you keep them around for a minimum of three or four years just in case an IRS agent wants to see them. Some may say that, after a few years, if you have not already been audited, you will probably be fine but be sure of the rules for your own state before you toss anything.
Keep all of your bills and invoices for the expenses. When you make a living in IM, there are plenty of things that can be deducted from your taxes. The expense of operating your site, for example is usually tax deductible. The money you spend on office items is frequently also deductible. Do you go to conferences? You may be able to deduct some of your travel costs as well as the cost of the conference itself. You could also deduct a lot of the money that you pay on a monthly basis for your internet connection. Make sure you keep all of your receipts and copies of paid bills so that you’ll have a document proving what you spent.
Pay on taxes throughout the year. Internet Marketing is formally deemed freelance work and freelancers often pay their taxes quarterly so that, when the end of the year shows up, they do not owe as much. A good amount to pay is thirty percent of what you make that quarter. There is also a system set up now that allows freelancers pay toward their taxes every month. Keep files of what amount you pay in. When you file your yearly tax forms, if you have accidentally paid too much into http://www.forbes.com/sites/robertwood/2014/04/03/how-long-can-irs-audit-it-all-depends-on-you/ the system, you will be granted a refund for what you have overpaid!
There are many systems to make your taxes easier to handle when you work in Internet Marketing. The IRS’s internet site has a large amount of practical hints that you can use to streamline your book keeping and tax prep. You might also look at, if you have the money, employing an accountant to take care of all of that for you.