3 Components of Taxes For Online Business Owners
Taxes for online business owners do not have to be complicated.
All you need is evidence of gross income, evidence of expenses, and signed W9s.
As long as you aren’t trying to pull a fast one, everything should go just fine.
Here are some suggestions…
Proof of Gross Income
Anytime anyone pays you anything; you will need a record of that payment.
Some companies want to get sneaky and try to slip some cash below the table.
Although this may work for a bit, eventually you will be found out.
Bear in mind; Gangster Al Capone was not convicted on his mob activities nor his numerous murders. Al Capone was caught on tax evasion. Crazy.
Track everything you get paid and report every penny even if you do not receive proper notice on some payments.
If you try to fudge the numbers, you will be discovered eventually. Save yourself a headache and save the money.
Proof of Expenses
Expenses are equally straightforward and complicated at the same time.
However, it doesn’t have to be difficult. If so, then you will need to keep a receipt and clear banks statements.
It is also helpful to write down the cost and the reason it’s a business related expense.
For example, you attend a seminar on internet marketing in Las Vegas.
The convention is no doubt a business expense.
The resort and travel is a business expense.
Taking in a show while you’re there isn’t an expense unless it’s related directly to your business.
The common expense for online businesses is freelancers or independent contractors.
These have special regulations that must be followed.
At the end of the calendar year, any independent contractor you paid $600 or more will require a 1099-MISC.
If you are not able to send the IRS this advice, then you won’t be able to maintain the pay as a business expense.
The same goes for affiliates and W9 forms.
The last thing an online business owner needs is a signed W9.
Previously, owners had to find a physical signature.
However, the IRS has considered internet advertising and now accepts digital signatures.
For example as an affiliate program business owner, you can require your affiliates to sign the W9 digitally, and it will work the same as a physical signature.
Тhіs аlsо mаkеs іt еаsіеr tо kеер trасk оf and easier to get.
To make tracking affiliate info even easier, small business owners can use free affiliate management software that connects with your accounting software.
The software will make sure every affiliate has the proper documentation before allowing payment to be made.
This means you will always have the tax advice you will need to send out 1099-MISCs at the end of the year, and you will always be safe with your taxes.
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