IRS & Taxes – Do not Forget About Taking Care Of Business | Online Internet Marketing

The life of an online marketer is busy, especially in the beginning. You’ve probably taken a while just getting everything set up the way you want it. Now that you finally have consistent traffic to your site and are seeing some income, it’s time to make sure you are “taking care of business.”

Your business is more than just mechanics of putting up your web site, driving traffic, and pitching a product. You also need to make sure you’re on firm footing with regard to your taxes.

Like any other business, the income you receive from your online business is taxable. Any company sending you money (like ClickBank) probably took your tax ID or social security number. At the end of the year you should get a Form 1099 from these companies. You’ll use the information from these forms when you file your income taxes. If you receive money from other sources you still need to report it on your income tax return, even if you do not receive a 1099 form.

This could very well be really important section of this specific issue. If you have a day job with regular tax withholding, your employer is making deductions from your gross pay and forwarding the money to the appropriate tax authorities. When you add a side business that does not make much money, you may be able to just file Schedule C (for self-employed persons) along with your regular tax return and do just fine. In addition, once you start generating significant income with your online business, you’ll need to make sure you pre-pay appropriate taxes. It’s important to make quarterly tax payments along the way, or you may be subject to a penalty for under-reporting your income.

If you do not have a day job, you can rapidly end up in dangerous territory with the feds concerning taxes. As a self employed person, you have to make quarterly tax payments based on your estimated income. You’ll also have to pay both halves of FICA. FICA is the Federal Income Contribution Act, and is primarily what keeps Social Security afloat. There are also other federal taxes you may need to pay.

Do not forget about local taxes. Many states impose income taxes, and even some counties, cities or parishes do. It is better to check now, make periodic payments and be prepared, rather than be surprised and in a deep hole at tax time.

While you are at it, you should also find out whether you need a business license. Many localities require a business license, even for an online business.

Even so, because you’re running a business, you can deduct your expenses from your gross, and only pay taxes on your net income. When you file your tax return, these expenses are commonly called deductions. There are a lot of things that are deductible, here are a few examples:

The cost of your domain name and web hosting Autoresponder costs. Office expenses Paid Traffic like PPC or PPM

If you purchase a computer to use entirely within the business you may be able to deduct it as well. There are other costs you may be able to deduct as a business owner, but these beyond the scope of this article.

With each expense you wish to deduct, you’ll need to keep proper records, and some deductions require very specific types of documentation.

As a smart marketer, you should pay attention to your costs and income now, if you want to avoid penalties down the road.

Warning: I am not an accountant or tax attorney, and cannot give you accounting or tax advice. This article should be taken as a reminder to plan for your taxes now. If you do not know the federal tax laws or the laws of your state, county, city or parish, it’s a good idea to hire an accountant or tax attorney. The fees they charge are deductible, and they can keep you out of a lot of financial trouble.

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