A Sure Fire Way To LOSE $9000!

Yes!

As soon as you start making any kind of steady money - get your tax strategy in place.

TL

Welcome to the club

It gets more painful with each passing year.

If it's not too personal, any advice on what you were doing wrong so others can look out for it?

Thanks a lot for your advise.


Mario

Of course the amount of tax will vary my country. It's all about the deductions. You can reduce your tax by claiming EVERYTHING as a business expense:

- Internet
- Domains
- Hosting
- Autoresponder
- Outsourcing
- Product purchases
- Electricity (if you work at home)

In my case I just didn't anticipate it being so high. On the plus side it means that I made a lot more money this year so I can't really complain.

Michael, I understand your electricity argument, but why can't you deduct expenses for hosting, domains, outsourcing etc?????

I think I need to sit down with my accountant and re-evaluate my deductions. But I don't deduct electricity though.

@Michael Oksa

Yep, you make very valid points and I definitely do not condone tax fraud. Also, this thread in no way constitutes professional advice and the circumstances will be different for everybody. Speak to your accountant if you require further advice.

In Australia you are able to make tax deduction on things that you use for business. I work at home so I can deduct a small portion of my utility bill, office furniture that type of thing. Any website related stuff is all used as a business expense.

As always, if you seek more advice go and get yourself a [good] accountant.

Get yourself a good a CPA, you will save yourself a lot of money in the log run.

You need to get someone who knows what he or she is doing. Some have no clue. If you are looking for a cheap accountant it is like getting a cheap contacter to work on your house. They MAY not know what they are doing and may run away with your money.

You need to find someone who is well known. Even if you pay a little more money, it is much better.

Tal

I don't understand how you lost $9000. Wouldn't you have had to pay that anyway, regardless of whether you were making quarterly payments or just paying annually?

Or are you saying you owe $9000 more than you otherwise would have?

I put 20% into a seperate account which is used to pay tax arrears.

In NZ you can deduct quite a bit related to your business so I just let my accountant take care of that and he just tells me how much I have to pay.

Hopefully with the 20% set aside I'm not too short when it comes to paying the bill (although it kind of sucks seeing all that money sitting in my bank account knowing it's there just to go to the government because I'm sure I would have more fun spending it!)

I pay quarterly. Makes things much easier.

In the US, once your business makes above a certain threshold you are required to prepay monthly via the electronic system.

Sucks, but keeps things up to date at least.

I've been able to earn more by having my tax money available throughout the year, even if part is just in a high-interest savings account, than the interest penalty due for not making quarterly payments. Plus the dollars I pay at the end of the year are worth less than when I earned them, so putting off payment of taxes as long as possible saves in inflation-adjusted terms as well.

But as has been said, seeing $50,000 or so go poof all at once at the end of the year can be a *little* depressing :p

P.S. While we're on the topic of tax issues you may forget about, USE TAX. That's what sales tax is called when it's not paid at the time of purchase, and every state that charges sales tax has use tax. If you are buying books on Amazon, training CDs on clickbank, or anything else without paying sales tax, you're legally required to remit that sales tax to the state yourself. And once you start filing income from a business with the state, most of them keep track of who hasn't paid any use tax in the last X years and audits those people/companies. So if you're not paying it, it'll catch up to you too.