One of the biggest and most potentially dangerous misconceptions about Internet Marketing is that it is a tax free marketplace. Folks go into IM believing that because they are generating an income online and being paid through, mostly, PayPal–they need not pay taxes on that money. It is untrue! Most importantly, failing to pay taxes on this income could get you into all kinds of trouble! Don’t worry, however: doing your taxes as an Internet Marketer does not need to be difficult. Here are some ideas that will help you.

1. Set up a visit with the local Small Business Association. All communities have some type of small business helping association or organization (generally run via a local community or city college) that has plenty of trained experts on hand to help you both set up your business and ensure that all of your tax issues are carefully and properly taken care of. Best of all, this resource is practically always no cost!

2. Monitor everything. This is worth echoing: keep track of everything. This is certainly simple enough to do with Excel. All you need is one spreadsheet that will keep track of all of the money you earn (down to the penny) and another that will keep track of all of the money you shell out (yet again, down to the penny). Don’t forget to keep each and every receipt and invoice for the money you pay out.

3. If you’ve got the money to do so, hire an accountant. This will likely allow you some freedom in the tracking of all of your taxes and small business numbers. You tell them how much cash you’ve earned, show them how much you’ve spent (you’ll need proof of these things) and they take care of the rest, particularly at tax time.

4. Pay toward the taxes you’ll owe throughout the year. A basic principle here is to pay in 30% of each sale. This can be done through quarterly Estimated Tax Payments or even monthly with the IRS. The IRS now has the ability to collect estimated tax payments whenever you think or want to make them. In this way you’ll not have an eye popping number that you owe at the end of the year (which will be particularly stressful if you haven’t saved up for it). What’s great is that if you pay too much through your estimated tax payments, you’ll get a refund exactly like you would by paying taxes with a normal job. It’s vital to talk to someone at the IRS so that you can get this set up the right way.

5. Discover which write-offs you’re permitted to take. If you want to operate your own business in your own home, many things such as the payments you make for your utilities become tax deductible just like the money you’re going to invest in supplies or business equipment. An accountant or an IRS rep will be able to help you determine what all you can deduct come tax filing season.

It isn’t difficult to get intimidated by the idea of paying taxes as an Internet Marketer. The good thing is that there are a number of resources that can help you ensure that you don’t get in trouble with the IRS and that you can still keep a healthy portion of the profit that you generate.

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