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Internet marketing and taxes?

by AdrianCostan
12 replies
I've been wondering about this thing for a while and want to hear your opinions.

There are a lot of people that do paid traffic and their whole business is based on getting
a good ROI. and 30-40% ROI is considered very good.

My question is, if the tax per income is anywhere from 20-50% depending on your
country how is that model sustainable?

Basically the roi you make on a campaign is cancelled out by the taxes so you brake even or even take a loss.

Am I understanding something wrong?
#internet #marketing #taxes
  • Profile picture of the author wolfmmiii
    Taxes are paid on profits, not revenue. The expenses for the paid traffic are exactly that - business expenses. The taxes you pay are based on your profits AFTER subtracting expenses.
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    • Profile picture of the author TrickyDick
      Originally Posted by wolfmmiii View Post

      Taxes are paid on profits, not revenue. The expenses for the paid traffic are exactly that - business expenses. The taxes you pay are based on your profits AFTER subtracting expenses.
      To clarify a bit....

      Taxes are paid on net profit.... That is taking your gross revenue and subtracting your expenses... The remainder is net profit.

      Mathematically...

      Gross Revenue - Expenses = Net Profit

      This is a VITAL competent when evaluating any business or WSO.... Too many people only look at the gross revenue and totally ignore expenses.

      In the end, gross revenue is not a measure of how successful a business is.... net profit is.
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  • Profile picture of the author kunalkumar
    Internet marketing, or online marketing, refers to advertising and marketing efforts that use the and to drive direct sales via, in addition to sales leads from or emails. Internet marketing and online advertising efforts are typically used in conjunction with traditional types of advertising such as radio, television, newspapers and magazines
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  • Profile picture of the author vitalseo
    Taxes are paid based on profit, better contact your tax auditor.
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  • Profile picture of the author agmccall
    go to an accountant and keep good books

    al
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  • Profile picture of the author Rose Anderson
    If you can afford an accountant it's always the best place to start.

    Otherwise, at least purchase a software such as Quicken and carefully track ALL your expenses.

    Open a separate checking account for your business expenses.

    Take your neatly organized records to an accountant at tax time. It's much cheaper than bringing them a box of receipts.

    Rose
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  • Profile picture of the author TopKat22
    Originally Posted by AdrianCostan View Post

    I've been wondering about this thing for a while and want to hear your opinions.

    There are a lot of people that do paid traffic and their whole business is based on getting
    a good ROI. and 30-40% ROI is considered very good.

    My question is, if the tax per income is anywhere from 20-50% depending on your
    country how is that model sustainable?

    Basically the roi you make on a campaign is cancelled out by the taxes so you brake even or even take a loss.

    Am I understanding something wrong?
    Yes, you have a misunderstanding.

    Here is an example.

    Say I spend $100 on an ad and make $500.

    My gross revenue $500 minus my expense of $100 (there may be other expenses but for this example we will only use the ad spend.) leaves $400.

    If I pay a 20% tax rate on that $400, taxes paid are $80.

    $400 minus $80 leaves $320.00 profit after taxes.

    I hope that helps you.
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  • Profile picture of the author getbread
    I don't think 30-40% ROI isn't considered good to most affiliate marketers. 100% is what most people aim for based on what I read.
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  • Profile picture of the author Kerie
    The best thing to do is to get an accountant, who will know all the expenses you can claim so that you only pay the correct tax amount. For example in the UK, if you work from home you can claim expenses for some of the utilities (heating and electricity) that you use, not just the cost of driving traffic to your offers.

    Example:

    Income: $500
    Advertising: $100
    Utilities: $5

    $500 - $100 - $5 = $395 Net Profit

    So you will pay tax on $395, (Remember this is simplified if you can not afford an accountant, do some studying on your countries tax requirements)

    You should also use a separate bank account from your personal account, so you can keep a clear record of costs and income.

    Keep up to date with your books, as it's a huge pain when trying to catch up, when the tax year ends.
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  • Profile picture of the author harryvent
    Better idea is track your expense then only identify your expenses. Past 5 years I am using Apptivo Expense Reports, you can manage all expenses. Then easily you should calculate extra amount expend for tax.
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  • Profile picture of the author zerofatzreturns
    yeah I think this has been said here in multiple ways but yeah man, your advertising cost is business expense and is deducted from the amount of money that you earned for the year (or your gross revenue) before you figure out how much you owe in taxes.

    SO make sure you are keeping good records on how much your ad spend is.


    Kam
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  • Profile picture of the author EPoltrack77
    Paying for advertising has nothing to do with it. This is a business expense and is not considered. Don't worry about it but just make sure to keep records so when you get audited cause you will in this business.

    That is one of the nice things about having your own business is the tax savings. Did you know that anybody who works a 9 to 5 job is in the worst tax bracket in this country. Each time you go to work you are throwing $20 out the window. Slaves for money
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