How to Pay Taxes With Internet Marketing

24 replies
I'm about to start trying make some extra money doing internet marketing. Though i don't expect many any or much, the thought crossed my mind is if i do make some how do you all go about paying your taxes. I have turbo tax would that help.

- also How do you all keep track of your income you make daily?. Also by the way I am a US citizen.
#internet #marketing #pay #taxes
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  • Profile picture of the author Ken Leatherman
    You will be able to track your daily sales through PayPal if they are your payment processor and most other payment processors will have a way to track daily sales. You will also receive a 1099 for all payments you receive. It will be up to you how you report your income.

    I'm not a CPA, tax person or any other legal entity and you should consult a professional prior to tax season.

    Ken


    The Oldd Geezer
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  • Profile picture of the author Michael Oksa
    Hi MK,

    Get an accountant. They will be able to save you more money than you spend on them. It's good to have somebody "on call" during the entire year to ask tax questions.

    If you won't be earning a lot, then you probably don't have to worry about paying quarterly taxes.

    The process I use is pretty simple (I don't use any tax/financial software, but it wouldn't hurt).

    1. Write down all income, and where you got it from.

    2. Write down all expenses, and what you spent them on.

    3. Let the accountant determine what qualifies as a legitimate deduction.

    Also, if you do ny outsourcing, or pay affiliates, you may have to send them a 1099-MISC if you pay them more than $600. This is a basic form, so don't let it scare you.

    However, you need to report ALL of your income from ALL sources, even if you earn less than $600 from a single source. I only mention this because a lot of people seem to be misinformed about it.

    To sum it all up: keep accurate records of income and expenses, and let your accountant sort it out.

    All the best,
    Michael
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  • Profile picture of the author WebDomain
    for US i think interesting variant LLC
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    • Profile picture of the author andrew zirkin
      Good thread on a confusing subject. My accountant saves me more then she costs every year. Yet she is honest and careful if I say can I deduct this she will say yes or no it does not pass the smell test and we don't I would rather pay then make mistakes.
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  • Profile picture of the author EPoltrack77
    Fantastic question! You know that by doing this you can classify yourself as a home business! What classifies you at this? An intent to make a profit and to work I think its 2 to 3 hours per week. Thats it, if you do those two things you can go into your employment and your employer has to chance your w2 or w4 I forgot witch one. Also your rent or mortage well a certain percent can be written off as well. That alone is pretty cool! Save all your receipts for everything you purchase that has to do with your online marketing. You can call turbo tax and someone can help you fill out the forms correctly. Learning to do this first yourself is important and then you can outsource it to an accountant if you want!
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  • Profile picture of the author Stuart Campbell
    Judging from what I've read here I should count myself lucky, any monies payed/transferred into paypal account is declared by my bank to the national reserve bank on my behalf(foreign currency), so once a year I simply fill out a one page form and that's it, taxes done.

    Just enquire with the bank you are using, they are the qualified people to give correct answers.
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    • Profile picture of the author hsbinmarket
      Originally Posted by Stuart Campbell View Post

      Judging from what I've read here I should count myself lucky, any monies payed/transferred into paypal account is declared by my bank to the national reserve bank on my behalf(foreign currency), so once a year I simply fill out a one page form and that's it, taxes done.

      Just enquire with the bank you are using, they are the qualified people to give correct answers.
      I am a banker by profession. I love ur trust on a banker.d
      And no doubt, its true. We, the bankers always try to save peoples' money. We provide counselling so that no one lose any penny for mistake and we feel it from our inside.
      Opposite idea are also availble. Some bankers now a days r making money using clients ignorance.
      May Almighty helps us to keep them away.

      So pls be concious in banking and try to know the banking at least as far as u need to deal with.
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  • Profile picture of the author OPTIMUSMKTG
    In the U.S. you're going to need to file taxes as an independent contractor which means you'll need to report your income/expenses on Federal Form Schedule C - Profit or Loss From Business. Be sure to keep detailed records.

    You should also contact your local business license office to see if your area requires a license. Do this or risk getting a letter down the road asking for taxes/penalties.
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  • Profile picture of the author hustlinsmoke
    Well I rarely get money orders or checks any more so easy to keep track with paypal, money b. and clickbank, You won't need to worry about it for now though, Only if you make over 600 will you have to provide info and then use go a 1099
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    • Profile picture of the author MKCookins
      Thank you all for the Reply's... I am a complete nooby to this whole internet marketing thing and figure i would join ChrisFarrellMembership.com Now when i am paying for his course and i do start making money would that go into the taxes or just what i make off my websites i create?
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      • Profile picture of the author usixly
        Anyone here left the US after becoming successful online?

        My wife and I have been talking about moving to South America for over 10 years, and now that we have our income and business(es) established online, we can live wherever we want...and are seriously considering relocating.

        As I started looking into the big move, I realized that maybe there would be some tax relief in immigrating OUT of the US..and bringing my foreign income into one of these other countries (Panama, Costa Rica, Ecuador, etc).

        Anyone have knowledge or experience on this subject? Would love to chat!
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  • Profile picture of the author CyberAlien
    I just print out the 1099 from PayPal and sent it to my accountant - so apparently it contains everything on it you need to do taxes. However, it would of course vary for each state. For example, I don't pay state income tax in Texas.
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  • Profile picture of the author Caden
    I've always wondered about that. So, you only have to report if you make over $600?
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    • Profile picture of the author Willie Crawford
      Originally Posted by Caden View Post

      I've always wondered about that. So, you only have to report if you make over $600?
      No, if someone PAYS YOU more than $600 and they are a U.S.
      company they are required to send you a 1099. That's why
      many U.S. based affiliate programs require a W2 before they
      will even issue you your first commission check. They don't want
      to have to chase after you after you cross that threshold.

      I receive commissions & payments as a sole proprietor,
      via several LLC's and via an S-Corp. Accountants are great
      to have as fishing buddies

      Willie
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  • Profile picture of the author Shane12
    I track everything in Excel, recording the transactions as they happen. At the end of the year, I go through that and print off the receipts and put them in a folder and put the information on my Schedule C.

    I'm very tempted to leave the US and have been researching for some time so that I may do so over the next few years. I've long considered living somewhere else, but the high taxes and healthcare costs are not something I want to deal with. Though I'm healthy now, I know that every American is one medical emergency away from bankruptcy.
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  • Profile picture of the author Curtis2011
    Originally Posted by MKCookins View Post

    I'm about to start trying make some extra money doing internet marketing. Though i don't expect many any or much, the thought crossed my mind is if i do make some how do you all go about paying your taxes. I have turbo tax would that help.

    - also How do you all keep track of your income you make daily?. Also by the way I am a US citizen.
    I'm pretty sure you just treat internet income as ordinary income for tax purposes.

    To do differently, you will probably need to incorporate as a sole proprietor or an actual LLC.

    As for your question on how I keep track of my finances, I am ashamed to admit that I track literally every dollar I make by hand on an Excel spreadsheet!
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  • Profile picture of the author RockNRolla
    If I were you I'd contact a professional accountant and get their advice. I done this when I first started out in internet marketing and it cleared up a lot of things.
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  • Profile picture of the author jbearnolimits
    This is very interesting. I was wondering if anyone had a rule of thumb for saving your money through the year to pay taxes at the end? What % is a good amount to put back a month? I am in the US and last time I used turbo tax I ended up paying almost 50% to taxes. I HOPE that was a mistake!
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    • Profile picture of the author Shane12
      Originally Posted by jbearnolimits View Post

      This is very interesting. I was wondering if anyone had a rule of thumb for saving your money through the year to pay taxes at the end? What % is a good amount to put back a month? I am in the US and last time I used turbo tax I ended up paying almost 50% to taxes. I HOPE that was a mistake!
      I remember my first year that I had a big profit, and it was terrible. Pretty much wiped out everything I'd managed to save up that year. Once you reach a point of profitability and owe over $1000 for the following year, you have to pay quarterly, unless you think you can make more investing the money and then just pay the penalty. What this will work out to as a percentage depends on a variety of factors, though it shouldn't be anywhere near half in most cases. I use 1040 Tax Calculator - Dinkytown.net Financial Calculators (filing as an individual) to get an idea of what I'm going to owe total for the year, and it does a pretty good job.
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      • Profile picture of the author jbearnolimits
        Originally Posted by Shane12 View Post

        I remember my first year that I had a big profit, and it was terrible. Pretty much wiped out everything I'd managed to save up that year. Once you reach a point of profitability and owe over $1000 for the following year, you have to pay quarterly, unless you think you can make more investing the money and then just pay the penalty. What this will work out to as a percentage depends on a variety of factors, though it shouldn't be anywhere near half in most cases. I use 1040 Tax Calculator - Dinkytown.net Financial Calculators (filing as an individual) to get an idea of what I'm going to owe total for the year, and it does a pretty good job.
        Quarterly? I had no idea. I guess it is time to hire someone to do my taxes. Should I hire an individual accountant or a company that does taxes? I really would prefer to have a company do it once a quarter but what would be best?

        Also I hear social security will need to be taken out too. At what point does that happen?
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        • Profile picture of the author Shane12
          Originally Posted by jbearnolimits View Post

          Quarterly? I had no idea. I guess it is time to hire someone to do my taxes. Should I hire an individual accountant or a company that does taxes? I really would prefer to have a company do it once a quarter but what would be best?

          Also I hear social security will need to be taken out too. At what point does that happen?
          I didn't either. I just randomly stumbled across it one day. It's something most people will never have to deal with. As the amount to avoid penalties is based on prior year earnings, I'm not sure there's a need for an accountant each quarter unless you are filing as a corporation. You should be able figure out what you owe per quarter by filling out IRS Form 1040-ES, which tells you what the IRS wants you to pay up front, assuming your income does not go down. I assume an accountant could prepare this for you while preparing your taxes if you want. Depending on your state, you may have to make quarterly payments to them, too. My state requires at least 80% of taxes to be paid during the year.

          You would be responsible for both the employee and employer share of social security and medicare, which amounts to 15.3%. This would be paid along with your taxes, and a portion of it can be deducted as a business expense.
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  • Profile picture of the author Mindz
    Great thread with a lot of great answer. I suggest getting an accountant early. Build a relationship with someone more experience in this field.
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  • Profile picture of the author rmolina88
    It took me until the age of 29 to keep track of all my expenses in excel (I'm 31 now).

    I really wish I did this earlier so my accountant wouldn't get so frustrated with me in the past.

    I keep track of EVERYTHING I spend money for. Internet Marketing (advertising, guides, etc) are tax deductible, so make sure you keep track of them!
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