Many internet entrepreneurs find themselves quite confused when it comes to paying the taxes on what they have earned. Some of them even believe that they do not have to pay taxes since it is so difficult for the government to track them. Other internet marketers simply refuse to recognize this obligation.
The truth is simple, everyone who earns money has to pay their taxes. All of the money that you earn through your Internet Marketing projects and services is considered income. This income is not exempt just because you made it on the internet. So, yes, you do have to pay taxes on the money you make with Internet Marketing and your taxes are going to be a little bit more complicated than they were when you were someone else’s employee. This article should help you get the facts you need.
What Are Quarterly Payments?
Quarterly payments is when you decide to pay quarterly of what you expect to make for the year. If you chose this option before, you were required to send them in quarterly. Now there is no prescribed time demanding a payment. It may be a wise idea to run this past an IRS agent, and then be sure to maintain exact records and you should have no problem when it comes to making out your annual tax papers. You could get lucky and have paid them more than you should have and get compensated for it!
What Is The Three To Five Rule
The government has broken down internet marketers into 3 categories. These categories are freelancers, entrepreneurs and sole proprieters. The general feeling of the IRS is that these people will probably make money no less than three out of each five years they are in business on the internet. If you consistently show a loss or no profit; the IRS will be looking into your business. If you are able to keep clear and concise records of your income and expenditures, you should have no issues if the IRS should decide to have a look. It is not a good idea to try and be sneaky when reporting your income; you may face a very negative penalty as a result.
Saving money for your retirement is extremely important if you are in the internet marketing arena! Your retirement fund is the key to being content at an older age, even if Internet Marketing is how you intend on earning your income. If you have the right ones you will possibly be able to diminish the amount of tax you will be liable for at the same time as you are securing your future. An IRA will give you a substantial tax deduction.
You should talk to your accountant or a representative at the IRS to figure out what kind of retirement account and fund you should open for yourself. This helps you take care of your tax responsibility and prevent you from having to work for the rest of your life.
Some marketers struggle to make money online so therefore they are more reluctant to follow tax rules. This circumstance makes it understandable as to why so many internet marketers would like to stay voluntarily unknowing when it comes to these circumstances. Actually, if you are meticulous with your records and are up on current tax information, you should have no problems.
Remember, not paying your taxes when you have earned money online may proof to be a huge error. You may find yourself having to pay penalties later or even worse facing jail time. Taxes are not as daunting as they may seem; take your time and figure that for every year you do them, you will be that much more ready for the life of your business.