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Internet Businesses and Taxation

Lots of Internet Marketers think that they do not have to pay taxes on the money they make through their Internet Marketing endeavors. Of course this is incorrect. Whether you earn money selling your services or your wares, you are still responsible to file these earnings with the IRS. The government may impose some severe fines if you opt to disregard this obligation. This is the last thing you will ever want to go through. In fact, the taxes you owe from your Internet Marketing are not as tricky as you may think. Below, we will be offering a few helpful suggestions on how to deal with this issue.

A general formula to consider when you are making money through Internet Marketing is to hold back about thirty percent of your income; which will go to the IRS. The actual amounts, of course, will fluctuate with your income. Once you have put this thirty percent into safe keeping; it will be there when you need it. The IRS will take estimated tax payments whenever you would like to pay them, or you can let your tax money add up to be paid all at once. This will lessen the amount you will need to pay when it is due at the end of the tax year. You will actually get money back if you have overpaid!

The three out of five rule is important to be conscious of.

This rule applies to the IRS figuring that of the three sorts of Internet Marketers (sole proprietors, freelancers, and entrepreneurs); they will be likely to have an income from their business three out of every five years. If you rarely show a profit, the IRS will be wondering why you are staying in business when you are not making money. As long as you are being honest and precise when you file, all will be well and the IRS will not find anything to take action on. Some people try to shuffle some numbers so they will not owe so much in taxes; you will likely not get away with it and will suffer dire consequences.

Record all of your medical expenditures. As a sole proprietor/freelance entrepreneur (the designations given to Internet Marketers) you probably do not have health insurance. But, you still have medical bills. Maintain a log of the cash that is spend on dentists and doctors. The rules on these types of expenses are varied, so you might want to talk to the IRS about them. Do not think that you can deduct all expenses. But, you might be able to find a portion that can help to reduce the amount of tax that you owe.

Taxes can be very unsettling for those earning money through Internet Marketing. For this reason, a lot of internet marketers hope they are not responsible to make notes of their earnings or pay a tax on them.

Actually, if you are meticulous with your records and are up on current tax information, you should have no problems. If you are not accurate with your facts and figures, you could be setting yourself up for disappointment. If possible, you need to relax when it comes to doing your taxes; they may seem overwhelming at first, but eventually you will have a wealth of experience under your belt.

Everyone selling merchandise whether it be brick and mortar or online are subject to taxation. Retailers Forum Magazine is proud to bring our readers the latest information and wholesale merchandise suppliers.