Taxation
Keep track from the beginning - and not in a Shoe Box!
Income taxes are probably right up there on your list of things not to look forward to, right along with root canals and changing the litter box. Of course, for many moms, income tax filing results in a decent refund check. If you start your own Internet business, will you have to say goodbye to those annual income infusions?
Not necessarily. Although filing for income taxes is more complicated when you’re a business owner, there are a lot of things you can do to ease the process and make sure that even if you don’t end up getting money back, you’ll at least end up not owing the government a few hundred dollars every year.
Here are some tax tips every Internet marketer should be familiar with:
• Sales tax shuffle. As an Internet business owner,
you’re doing business with people all over the country, and sometimes
even all over the world. Sales taxes are supposed to be collected for every
state you do business with. So, does this mean you have to figure a separate
sales tax rate for every single customer who orders something from you? No,
it doesn’t! The legal definition of “doing business” says
that you are only doing business in a state in which you have a physical presence—your
home office. Therefore, you’re only required to charge sales tax for residents
of your own state. In fact, many Internet businesses omit sales tax altogether
to avoid confusion. But if you are in Canada, you must collect the GST from
your Canadian customers.
• Deductions Central. The idea of filling out an itemized
deduction form for income taxes makes many people cringe. However, as an Internet
business owner it’s to your advantage to keep track of everything you
can deduct from your income taxes. This includes office space (up to 25 percent
of your rent, mortgage payment and utilities), equipment and supplies, and business-related
travel expenses. Driving to your local office supply store for envelopes and
paper clips? Keep track of your mileage and hang on to your gas receipts; they’re
deductible!
• Automated accountants. Good accounting software is
one of the best investments you can make for your Internet business. Programs
like QuickBooks, Quicken for Business, Peachtree and Simply Accounting simplify
your financial records and make tax time far less painful.
You can find links to more information on small business taxes in the Resources section of this book.
Start Your Business
Making Your Business Official
Types of Business Structures
Taxation of Your Business
Your Business Plan
Announce Your Business to the World!
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